Got Cash? Why purchasing a condo in Florida might be a very wise investment for you.

Real estate in Florida certainly has taken a beating over the past half of a decade. There is no doubt about this. We have seen prices dip as much as 30%-50% (depending on the specific area) since the peak in 2006. Out of all of the real estate in Florida though, condos have probably been hit the hardest. Before the real estate market tanked a few years ago, financing for purchasing a piece of property was much easier to obtain than it is now. Whether you were looking to purchase a townhome, a detached single family home or a condo, if you could fog a mirror, you could probably get a mortgage.

Well in today's market if you are looking to buy a single family detached home or a townhouse, financing is not as easy to come by. Your credit score must be stellar, you must be able to document a couple years worth of income from steady employment, and you must have an adequate downpayment. However, while it may be tough to get financing for a townhome or a detached single family home, you can still get financing. When it comes to condos in Florida though....financing is pretty much non existent

A few years ago, Fannie Mae, Freddie Mac (which alone currently account for purchasing about 90% of home loans made) and other companies in the secondary mortgage market stopped buying condo loans in Florida. The secondary mortgage market consists of companies that buy mortgages from lenders who originate mortgages. If companies in the secondary mortgage market stop buying condo loans in Florida, that means that lenders in Florida who originate the condo loans will have no one to sell those loans to. This would mean that lenders who originate the loans would have to keep those loans that they created. Well, the vast majority of lenders won't make a home loan if they can't sell that loan to a lender in the secondary mortgage market. It's simply too much risk. For this reason, home loans for condos in Florida are very hard to come by.

There are two exceptions to this. If the condo community is approved by the Federal Housing Association (FHA) than you can get an FHA backed home loan on a condo. Only owner occupants can get FHA loans though, and there are not that many FHA condo approved communities out there. If you are buying the property as an investment, you can't get an FHA loan no matter what. The other exception is if a lender is willing to make a loan on a condo in Florida and keep the loan on their books. This type of loan is called a portfolio loan. It's given that name because the lender keeps the loan in it's own "portfolio." If a lender will do a portfolio loan for a condo in Florida, than they will usually charge a higher interest rate than normal so they are compensated for the extra risk that comes with keeping the loan on their books. The number of banks who will do a portfolio loan on a condo in Florida though are very far and few between. For example, in my own town of Tallahassee, I only knew of 1 lender who would do a portfolio loan, and they have now stopped doing the portfolio loans.

Even with the availability of FHA backed loans on condos in approved communities and portfolio loans, it's safe to say that loans on condo's in Florida are pretty much extinct like the dinosaurs. So while this is unfortunate to most would-be buyers out there, this situation creates a great opportunity for some. Enter the cash buyer!

For the cash buyer this situation creates a great opportunity to make some money. Let's think about this for a second. Without the availability of home loans to purchase condos in Florida, the pool of buyers available to purchase these condos goes way down. This means that demand goes way down. When demand goes way down, prices go down as well. The only person that can buy these condos are people who can purchase them out right with cold-hard cash, and there are not too many people out there who have that much cash. So this means that these people that do have the available cash can snatch these condos up for bargain basement prices.

While the prices of condos in Florida may have declined more than say a townhouse, the amount of money you can get for rent has not declined more than what you can rent a townhouse for. Example, let's say you have two properties. Both properties are 1200 square feet, are built in 2000, have 3 bedrooms and 3 bathrooms and are in a similar area. One property is a townhouse and the other is a condo. The townhouse might sell for $80,000 and rent for $1000. The condo will also rent for $1000 a month, but it will only sell for $60,000. This means that you will make a better return on your money if you purchase the the condo.

These two properties are the same pretty much except for the fact that one is a condo and the other is a townhouse. The renter does not care whether it's a condo or a townhouse. The renter cares about things like how many bedrooms and bathrooms the property has, the location of the property and the condition of the property. For this reason, both properties will command the same rent. However, there is a larger pool of buyers to purchase the townhome as an investment property, so this higher demand drives the price of the townhouse up. Only people with enough cash to purchase the condo out right can purchase the condo, so this decreases the size of available buyers, decreases demand, and decreases the price. For the cash buyer, this also increases his return on his investment.

I know what some of you are saying right now. "Well condos have high monthly association fees that decrease return." This may be true, but it's been my experience that the increased return that you get from the reduction in price due to the fact that the property is a condo more than offsets the decrease in return that you experience from paying the monthly condo fee. Plus, you do get something for the monthly condo fee that you pay. The condo fee will usually pay for insurance on the exterior of the building, so your monthly homeonwers insurance will cost you less on a condo than if you were to buy a townhouse or a single family home because the coverage you would have to purchase would not have to cover as much with a condo. Also, the condo association usually takes care of things like maintaining the grounds, maintaining the exterior of the building, and they usually will have a termite bond on the property. So the condo fee that you pay monthly is offset somewhat because you don't have to spend as much money on the items just mentioned.

Here is another thing to consider about purchasing condos that most people don't consider. Currently Fannie Mae, Freddie Mac and other companies in the secondary mortgage market are not purchasing condo loans in Florida. However, do you think this will be the case forever? I don't think so my friend. Once the real estate market starts picking up again, these companies in the secondary mortgage market will most likely start purchasing condo loans in Florida again as well. Here is why.

These companies in the secondary mortgage market stopped purchasing condos in Florida because they viewed condos in Florida as a risky investment. The reason they viewed them as a risky investment is because (mostly in South Florida) during the real estate boom people payed way too much money for these condos. Once these people realized they could not afford these properties they stopped paying their mortgages and also stopped paying their condo dues. When people stopped paying their condo dues, the condo associations lost money. When the condo associations lost money, they could not properly maintain the condo community the way they were suppose to . When they could not maintain the condo community the way they were suppose to, the condos in the community began to lose value as a result. When the lenders in the secondary mortgage market realized this was happening in a very large scale in Florida, they said "Well looks like we made a bad decision with buying all those condo loans in Florida. They are losing value as we speak, so we better not buy anymore of those condo loans. They are way too risky." BOOM! Just like that, no more condo loans in Florida.

However, what is happening now is that people with cash are coming in and buying these condos up for dirt cheap, and these new owners can afford to pay their condo dues since they got such a good deal on the property. Now condo associations are starting to collect more and more dues in these condo communities which means that they will be able to start properly maintaining the communities again. Once companies in the secondary mortgage market realize this is happening, they will no longer view condos in Florida as a risky investment, and they will start buying condo loans in Florida again. How long will this take? I don't know. It could be 2 years, it could be 4 years, it could be 5 years. It will happen though. When it does, this will be more good news for the investor who purchased their condo in Florida with cash.

When people can get financing for condos again this will increase the buyer pool for condos in Florida, it will drive up demand for condos, and it will drive up the prices. This means the cash buyer's condo increase in value. So now not only is the cash buyer getting a good cash flow return from the rental income, but they are also increasing their return since the property value has appreciated.

So there you have it. If you have a bunch of cash available that you want to invest into real estate, think about purchasing a condo here in Florida. You'll make a great cash flow return from your rental income, and when companies in the secondary mortgage market start purchasing condo loans in Florida again, your property will most likely appreciate a lot in value.

If you have any questions about condos, if you are interested in purchasing a condo, or if you just have any general real estate related questions, please don't hesitate to contact me.

Bobby Nahoom
Amac Real Estate Company
(850) 567-0037
nahoom1171@yahoo.com
http://www.bobbynahoom.com/

Tallahassee Real Estate Market Update: 05/01/2011-08/31/2011

Today I will be giving you an update on the current condition of Tallahassee's real estate market. Once again I have taken the liberty of doing some research, and using the Tallahassee Board of Realtors MLS statistics, I have pulled and analyzed some very useful data that I will be using here today to give you an idea of how Tallahassee's residential real estate market is doing. In my research I made year to year comparisons covering and comparing the time periods of May 1st 2010 through August 31st 2010 to May 1st 2011 through August 31st 2011. To make my data as meaningful as possible, I divided propeties by both price range and location. I divided the properties up into 5 different price ranges and 4 different areas of town. In my research I looked up the number of homes listed during those time periods, the number of homes sold in those time periods, the average sale price of the homes that sold in those time periods, the average number of days it took for a home to sell in those time periods, and the sale price to list price ratio (this is the average % of what a home sold for compared to what it was listed for sale at). I pulled all this data for all properties in each price range and each area of town. Below is a summary of the data that I found categorized by price range and for Tallahassee as a whole.





Year Over Year Market Statistics for Tallahassee As A Whole.

• 23% decrease in the number of homes listed for sale. (1,534)




• 5.9% decrease in the number of homes sold. (918)




• .3% increase in the average price of a home




• .31% decrease in the average sale price to list price ratio




• 17 day increase in the time it took to sell a home (146 days)

To sum up the state of Tallahassee's overall real estate market, I would say that our local real estate market has bottomed out and is going up in value and recovering very slowly. The worst of times for our local real estate market appears to be behind us though. The number of homes actively listed for sale has decreased by a very large margin. This is important, because the supply of homes for sale has to come down to normal levels before we will see home prices start to increase again. Also, home prices overall in Tallahassee are up. Even though prices have only risen by a very small amount, they have still risen. The number of properties sold did decrease by a small amount, but the number of homes sold compared to the number of properties listed for sale as a percentage increased by over 10%.

With home prices going up over last year, it appears that prices are going up again. I would say that to be safe though, we need to see prices continue to consistently go up year over year in order to be certain that our real estate market here in Tallahassee is completely out of the hole.

The average sale price to list price ratio has decreased very slightly from last year, but I don't think its gone down by a large enough percentage to say that buyers have any more power in the market than they did last year. In fact, they might have less power due to the fact that there are not nearly as many properties to choose from this year as there were last year.

Finally, the average number of days that it took to sell a property in Tallahassee has increased. However, I don't think this is indicative of a softening real estate market. I think this is due to the fact that foreclosure sales are taking longer to close than they were last year. With foreclosure sales taking up a large percentage of the overall sales in Tallahassee, these sales have increased the overall average time period it takes to close on a home in Tallahassee.

I just mentioned above the overall average trend for Tallahassee's real estate market as a whole. However, within certain price ranges and in certain areas of Tallahassee, there are deviations to this overall average trend. As you will see in the statistics below, there are some areas of Tallahassee where sales are up, prices are down, ect... To see the specific statistics for different price ranges and different areas, continue reading.

$0-$125,000 price range

Northeast Tallahassee

• 40.5% decrease in the number of homes listed for sale




• 10.3% increase in the number of properties sold.




• .8% decrease in the average sale price




• 242 day decrease in the average number of days it took to sell a home (168 days)




• 3.16% decrease in the average sale price to list price ratio (91.53%)

Northwest Tallahassee

• 22.5% decrease in the amount of properties listed for sale




• 7.6% increase in the number of properties sold




• 9.4% decrease in the average sale price




• 65 day increase in the average amount of time it took to sell a home (158 days)




• .66% decrease in the average sale price to list price ratio (93.16%)

Southeast Tallahassee

• 28.6% decrease in the number of properties listed for sale




• 30.7% increase in the number of properties sold




• 8.3% decrease in the average price of a property sold




• 32 day increase in the average time it took to sell a property (150 days)




• .49% decrease in the average sale price to list price ratio (92.93%)

Southwest Tallahassee

• 35.9% decrease in the number of properties listed for sale




• 16.1% decrease in the number of properties sold




• 16.2% decrease in the average sale price




• 1 day increase in the average amount of time it takes to sell a property (118 days)




• 4.57% decrease in the average sale price to list price ratio (93.42%)

Summary of the $0-$125,000 price range

Overall this price range is marked by a very large decrease in the number of properties listed for sale along with a modest overall increase in the number of properties sold. The southwest part of Tallahassee is the only area that has deviated from this trend. There was a decrease in the number of properties sold on that side of town. All areas of town except for the northeast side of town saw an increase in the average amount of time it took to sell a property. There was a decrease in the average sale price to list price ratio for all areas in this price range. Finally, all areas showed decreases in the average price that a property sold for.

Declining prices, a declining sale price to list price ratio, and an increase in the average amount of time it takes to sell a home all indicate that we are in a weak real estate market (a buyer's real estate market). However, the decreased number of properties available for sale and the increased number of properties sold, indicate that the market for homes in this price range is at least recovering and is better off than last year. It will take some time though for the market for homes in this price range to completely recover though.

$125,001-$250,000 price range

Northeast Tallahassee

• 13.96% decrease in the number of properties listed for sale




• 7.8% decrease in the number of properties sold




• 2.3% increase in the average sales price




• 35 day increase in the average amount of time it took to sell a property (139 days)




• .21% increase in the average sale price to list price ratio (96.56%)

Northwest Tallahassee

• 33.15% decrease in the number of properties listed for sale




• 24.4 % decrease in the number of properties sold




• 1.4 % increase in the average sale price




• 37 day increase in the average amount of time it took to sell a home (104 days)




• 1.6% decrease in the average sale price/list price ratio (96.35%)

Southeast Tallahassee

• 36.3% decrease in the number of properties listed for sale




• 43% decrease in the number of properties sold




• 1.7 increase in the average sales price




• 24 day increase in the number of days it took to sell a home




• 1.55% decrease in the average sale price to list price ratio

Southwest Tallahassee

• 32.4% decrease in the number of properties listed for sale




• 65% decrease in the number of properties sold




• 6.8% decrease in the price of the average property sold




• 286 day increase in the number of days it took to sell a home




• 6.63% decrease in the average sale price to list price ratio

Summary of the $125,001-$250,000 price range

Overall it seems that home sales in this price range are struggling compared to sales during the same time period in 2010. Property sales have decreased overall by a fairly large amount in this price range. Also, it is taking longer to sell properties in this price range than it did last year. With the exception of the northeast side of town, the average sale price to list price ratio has decreased indicating that people purchasing homes in this price range have more negotiating power compared to last year.

One positive thing that is happening with homes in this price range though is that prices are increasing. The exception is homes on the southwest side of town. Another positive thing about homes in this price range is that the number of properties listed for sale has decreased. With increasing prices and decreasing housing inventory, it looks like the market for homes in this price range is improving.

$250,001-$450,000 price range

Northeast Tallahassee

• 16.2% decrease in listings


• 8.9% increase in the number of properties sold


• 5% increase in the average sales price


• 1.03% decrease in the average list price to sale price ratio (95.22%)


• 7 day increase in the amount of days it took to sell an average home (121 days)

Northwest Tallahassee

• 17.24% decrease in the number of properties listed for sale


• 11.1% decrease in the number of properties sold


• 8.6% increase in the average price of a home sold


• 4.03% decrease in the average sale price to list price ratio (91.3%)


• 42 day increase in the average number of days it took to sell a home (220 days)

Southeast Tallahassee

• 26.7% decrease in the number of properties listed for sale


• 8.7% decrease in the number of properties sold


• 1% decrease in the average sales price


• .95% decrease in the average sale price to list price ratio (95.8%)


• 25 day increase in the average number of days it took to sell a home (100 days)

Southwest Tallahassee

• The number of properties listed for sale increased from 5 in 2010 to 9 in 2011.


• The number of properties sold stayed constant at 1


• The average sale price dropped from $375K in 2010 to $280K in 2011. (Keep in mind only 1 property sold each year)


• 6.5% increase in the average sale price to list price ratio (86.15%)


• 107 day increase in the average amount of time it took to sell a home (231 days)

Summary of the $250,001-$450,000 price range

It should be noted that the majority of sales and listings in this price range took place on the northeast side of Tallahassee. With the exception of the southwest side of Tallahassee, the number of properties listed for sale in this price range dropped sharply. On the northeast side of town we saw a small increase in the number of properties sold, and in other areas of town sales decreased or stayed the same. Homes in this price range saw a small increase in the average sales price. There was a decrease in the average sales price of homes on the southwest and the southeast side of town, but these two areas only accounted for a very small percentage of the total homes sold in this price range. The average sale price to list price ratio of homes in this price range declined. This does not appear to be due to a softening of the market for homes in this price range though. This appears to be due to the fact that people are listing their homes for a higher price. Finally, it is taking more days on average to sell a home in this price range as opposed a year earlier, but this is likely due to people increasing the listing price of their homes in this price range.

With properties values up, sales up on the northeast side of town (which accounts for most sales in this price range), and a decrease in the number of properties available for sale, it appears that the market for homes in this price range is getting stronger.

$450,001-$750,000 price range

Northeast Tallahassee

• 7.5% increase in the number of properties listed for sale


• 5.9% increase in the number of properties sold


• 3.5% increase in the average sale price


• 1.35% decrease in the average sale price to list price ratio (95.58%)


• 21 day decrease in the average amount of time it took to sell a property (70 days)

Northwest Tallahassee

• Total properties listed for sale increased from 3 properties to 5 properties


• Total sales stayed the same at 2 properties


• The average sales priced decreased from $625,000 to $562,500


• The average sale price to list price ratio increased by 47% (98%)


• 13 day decrease in the number of days it took sell a home (25 days)

Southeast Tallahassee

• 44% increase in the number of properties listed for sale


• sales stayed the same at 3 properties


• 1.5% increase in the average sale price


• 10.04% decrease in the average sale price to list price ratio (95.58%)


• 56 day increase in the average amount of time it took to sell a home (70 days)

Southwest Tallahassee

• No activity

Summary of the $450,001-$750,000 price range

In this price range we saw an increase in the number of homes listed for sale, and in all areas home sales either increased or stayed the same. The southeast part of Tallahassee saw a small increase in the average sale price, but the southeast only accounted for a very small percentage of the number of homes in this price range. As a whole, homes in this price range decreased in value. The southeast side of town saw decrease in the number of days it took to sell a home on average, but the northeast and the northwest side of town, which accounted for the majority of sales in this price range, saw a decrease in the average number of days it took to sell a home. Finally, the average sale price to list price ratio decreased in this price range.

The number of properties sold increased in this price range. However, with declining sales prices and an increased number of homes available for sale, the market for homes in this price range does not appear to be getting better at this point.

$750,000+ price range

Northeast Tallahassee

• 36.4 % decrease in the number of properties listed for sale.


• 20% decrease in the number of properties sold


• 7.4% increase in the average sale price


• 8.92% increase in the average sale price to list price ratio (89.99%)


• 4 day decrease in the average amount of time it took to sell a home (209 days)

Northwest Tallahassee

• The number of properties listed for sale increased from 1 to 4 listings


• The number of properties sold increased from 0 to 1 listing


• The property sold for $825,000


• 100% sale price to list price ratio

Southeast Tallahassee

• Properties listed for sale increased from 0 to 1 listing


• Properties sold increased from 1 property to 2 properties


• 6.8% decrease in the average sales price


• 7.94% increase in the average sale price to list price ratio (93.37%)


• 146 day increase in the average time it took to sell a property (206 days)

Southwest Tallahassee

• No activity

Summary of the $750,000 price range

Sale prices and the number of properties listed for sale increased in this price range, the average number of days it took to sell a home decreased, the number of properties sold increased, and the average sale price to list price ratio of homes in this price range increased. These are all signs that the market for homes in Tallahassee priced $750,000 and up is getting better.

Yes it may be a good time to buy, but is it a good time to buy for you?

All over the place, in the media, from friends and family, on the internet, ect... all you hear about is how it is such a good time to buy real estate these days. With interest rates near historic lows and home prices as low as they have been in the last decade, yes it is true it is a good time to buy. However, is it a good time to buy for you? It might not be. If you give in to all the chatter about how it is a good time to buy and you purchase a home when you are not ready to do so, it could spell long term financial ruin for you. If you are thinking about buying a home, here are some things to consider.

First off, how stable is your employment? If you purchase a home, and you are layed off soon after that, how are you going to be able to afford your mortgage payments? This is something to think about, especially with the way that the economy is these days. If you buy a home, lose your job, than lose your home to foreclosure, that foreclosure could linger on your credit report and haunt you for 7 years.

Do you have an adequate emergency fund to hold you over in the event that you do lose your job or for some reason can't make your mortgage payments after you buy your home? Before you decide to purchase a home, it would be a good idea for you to have an emergency fund available that would enable you to pay your bills for 6-12 months without any income.

How long would you plan on living in the home if you plan on buying it? If you don't plan on being in the home for at least 3-5 years (probably closer to 5 years in this market) than you should probably not buy a home. If you live in the home for less time than that, you will probably end up losing money on the home. In addition to the purchase price of the home, there are other expenses associated when you purchase a home. There are also expense as well as when you sell the home. When you purchase the home you have buyer's closing costs that you have to pay for. When you sell the home you have seller's closing costs that you have to pay for. The home will need to appreciate by at least as much as those closing costs in order for you to break even. Home prices are at best bottoming out right now in most markets, so it could very well be 5 years before your home appreciates enough to break even.

Are you able to qualify for the best interest rate on a home loan right now? When you go to get a home loan, the interest rate that you get on your home loan will depend on a few factors. Among those factors are your credit score, how high are your expenses comparted to your income (debt to income ratio), and the total value of all the assets you own. If you have a good credit score, your expenses are not too high compared to your income, and/or you have an adequate amount of assets, than the lender will usually give you the best interest rate available. It may not seem like very much, but even just a one half of one percent increase in your interest rate can cost you big bucks in the long run. To illustrate, let's compare a $150,000 30 year fixed rate loan at a 5% interest rate compared to the same 30 year fixed rate loan with a 4.5% interest rate. With the 4.5% interest rate you will have paid $427,154.71. With the 5% interest rate, you will have paid $520,161.65 at the end of the 30 year period. As you see that additional .5% in the interest rate will cost you an additional $93,006.94 over 30 years. That's money you could have stashed away for retirement. It might be beneficial for you to wait 6 months or a year to buy so you can work on improving your credit score as well make and save more money so that you can qualify for a better interest rate.

Have you factored in the hidden costs of homeownership? In addition to the mortgage payment, you have a list of other costs associated with homeownership as well. Some of these costs include property taxes, homeowners insurance, homeowners association fees if you live in a certain community that charges those fees, regular maintenance and upkeep of the home, and misc. and unforeseen repairs. These other expenses can add up. They can especially add up if you have some big ticket items that you have to spend money on such as a new roof or a new A/C system. Yet it is true that in the long run homeownership is a good investment and is better than renting. However, you usually have to live in the home for a long enough period of time before you can recognize the saving that homeownership has over renting.

Have you evaluated why you are buying and made sure it is for a good reason? Sometimes people buy homes for the wrong reasons. For instance buying a home you really can't afford so that you project a certain level of status. This is a bad idea, and it will probably end up making you house poor. Worst case, you could end up not affording your payments and you could get foreclosed on. Another good example is someone buying an investment property, and they are counting on a certain level of appreciatiation in order to acheive a certain level of return. In this market this would be a bad idea. In this market it is best to count on achieving a certain level of return on a property from rental income and not from estimated appreciation in the value of the home. Of course this is because no one knows how much (if any) homes will appreciate in the next few years. So when you are buying a home, make sure it is for the right reasons.

Homeownership provides a lot of benefits. There is something very nice about living in a place that is your's and not someone else's. Homeownership provides community stability, and it is proven that children of parents who own their homes usually do better in school and are less likely to become teen parents. Homeownership is a great thing. Just make sure that it is the right time for you to become a homeowner.

2011 Tallahassee Real Estate Market Update Part 1

Today I will be giving you an update on the current condition of Tallahassee's real estate market. Once again I have taken the liberty of doing some research, and using the Tallahassee Board of Realtors MLS statistics, I have pulled and analyzed some very useful data that I will be using here today to give you an idea of how Tallahassee's residential real estate market is doing. In my research I made year to year comparisons covering and comparing the time periods of January 1st 2010-April 30th 2010 to January 1st 2011-April 30th 2011. To make my data as meaningful as possible, I divided propeties by both price range and location. I divided the properties up into 5 different price ranges and 4 different areas of town. In my research I looked up the number of homes listed during those time periods, the number of homes sold in those time periods, the average sale price of the homes that sold in those time periods, the average number of days it took for a home to sell in those time periods, and the sale price to list price ratio (this is the average % of what a home sold for compared to what it was listed for sale at). I pulled all this data for all properties in each price range and each area of town. Below is a summary of the data that I found categorized by price range and for Tallahassee as a whole.


YEAR OVER YEAR MARKET STATISTICS FOR TALLAHASSEE AS A WHOLE


26.6% decrease in number of homes listed for sale (2,233 homes listed)

5.5% increase in number of homes sold (955 homes sold)

9.7% decrease in average sale price of a home ($153,743)

2.26% decrease in sale to list price ratio (93.33%)

17 day increase in the average amount of time it takes to sell a home (158 days)

Overall, the Tallahassee real estate market appears to be headed in the right direction toward recovery, but it is clear that we have not hit the bottom. The amount of properties listed for sale has sharply decreased in the last year, and at the same time we have experienced an overall increase in sales. This is clearly a good sign. A decrease in our housing inventory and the increase in sales is exactly what we need to happen in order for home prices to stabilize and begin to increase again. This is basic economics. You decrease supply and increase demand, and eventually prices will rise. However, we still are not quite at that point where the change of supply and demand has been dramitic enough for prices to stablilize yet. The over supply of homes coupled with the downward pressure on prices from foreclosures and short sales has caused prices to continue to fall.


In addition to this, the overall sale to list price ratio has dropped by 2.36% over the past year. The sale to list price ratio is what the average house sells at compared to what it was listed for sale at. For instance, if a house is listed for sale at $100,000 and it sells for $95,000, the sale to list price ratio for that home is 95%. A high sale to list price ratio is a sign of a strong and healthy real estate market (a seller's market). A low sale to list price ratio is a sign of a weak real estate market (a buyer's market).


Finally, it appears that the average amount of days that it took to sell a house that sold in this time period increased in from last year. Typically, the longer the average time period it takes to sell a home, the weaker the housing market.


As you will see from the specific statistics on our local housing market below, in certain price ranges in certain areas of town, prices are actually stabilizing or even increasing slightly, so it's not all bad news. Most of the decrease in our housing market is occuring in the lower priced properties and in the highest priced properties. The market for mid-range priced homes, especially in northeast Tallahassee, seems to be a more stable and healthy than the Tallahassee real estate market as a whole.



The $0-$125,000 Price Range.


Northeast Tallahassee


9.1% increase in the number of houses listed for sale

12% decreases in the number of homes sold.

2.8% decrease in the average sale price

45 day increase in average time it took to sell a home (155 days)

5.92 % decrease in the average sale price to list price ratio (90.2%)

Northwest Tallahassee (The college side of town)



29.3% decrease in the number of properties listed for sale

7.5% increase in the number of properties sold

18.6% decrease in the average sale price

2.3% decrease in the average sale price to list price ratio (93.8%)

14 day increase in the average amount of time it took for property to sell (151 days)

Southeast Tallahassee



16.1% decrease in the amount of properties listed for sale

62.7% increase in the number of properties sold

20.4% decrease in the average sales price

2.3% decrease in the average sale price to list price ratio (91.52%)

27 day increase in the average amount of days it took for a property to sell (129 days)

Southwest Tallahassee



4.7% decrease in the amount of properties listed for sale.

97% increase in the amount of properties sold

24.2% decrease in the average sales price

6.15% decrease in the average sale price to list price ratio (87.35%)

76 day increase in the average amount of days it took for a property to sell (165 days)

Summary of the $0-$125,000 price range


Overall in the price range, the number of properties listed for sale decreased dramatically, and the number of properties sold has increased dramatically. The increase in sales has seemed to be caused by the steep decrease in the average sales price of homes in this price range. Home prices have faced extreme downward pressure from the abundance of distressed sales in this price range. The average amount of days it took to sell a home in this price range increased and the average sale price to list price ratio has decreased which indicates that this price range is becoming more of a buyer's market.


The area of town that was the exception to the general trend for this price range was the northeast part of Tallahassee. The market in the northeast seemed to be much more stable with prices not dropping as much as in other areas of town. Also, sales went down and the number of properties listed for sale went up as well which are both the opposite of what happenend on all other three areas of Tallahassee.



The $125,001-$250,000 price range.


Northeast Tallahassee


17.9% decrease in the number of properties listed for sale

5.35% decrease in the number of properties sold

1.1% increase in the average sales price

.3% increase in the average sale price/list price ratio (96.29%)

10 day decrease in the average number of days in took a home to sell (139 days)

Northwest Tallahassee


48.7% decrease in the number of properties listed for sale

45.2% decrease in the number of properties sold

2.9% increase in the average sales price

.44% decrease in the average sale price to list price ratio (96.84%)

15 day increase in the average amount of days it took a home to sell (156 days)

Southeast Tallahassee

43.6% decrease in the number of properties listed for sale

30.7% decrease in the number of properties sold

2.5% increase in the average sales price

1.43% decrease in the average sale price to list price ratio (96.06%)

7 day decrease in the average days in took to sell a home (121 days)

Southwest Tallahassee


62% decrease in the number of properties listed for sale

69% decrease in the number of properties sold

1.67% decrease in the average sales price

.62% decrease in the average sale price to list price ratio. (98.73%)

302 day increase in the average amount of time it took to sell a home (405 days)

Summary of the $125,001-$250,000 price range


Overall this price range of homes was marked by price stability. Prices increased very slightly in the northeast, northwest, and southeast parts of Tallahassee while decreasing slightly in the southwest part of Tallahassee. In this price range, both the number of properties listed for sale and the number of properties sold decreased pretty sharply which indicates that there was an overall decrease in buying and selling activity in this price range.

With the exception of the southwest part of Tallahassee, the average days it took to sell a property in this price range went down. This probably has to do with the fact that the amount of homes to choose from in this price range that are for sale has decreased.

The average sale price to list price ratio alse decreased very slightly in the price range which means that overall the market for homes in this price range has very slightly shifted to more of a buyer's market


The $250,001-$450,000 price range


Northeast Tallahassee


16.78% decrease in the number of properties listed for sale

30.7% decrease in the number of properties sold

3.5% increase in the average sales price

.38% increase in the average sale price to list price ratio (96.19%)

18 day increase in the average number of days it took for a property to sell. (151 days)

Northwest Tallahassee


29.2% decrease in the number of properties listed for sale

60% increase in the number of properties sold

.6% increase in the average sales price

4.08% increase in the average sale price to list price ratio

74 day increase in the average number of days it took to sell a property. (203 days)

Southeast Tallahassee


29.8% decrease in the number of properties listed for sale

280% increase in the number of properties sold (from 5 sales in 2010 to 19 sales in 2011)

5.1% increase in the average sale price of a home

1.68% increase in the average sale price to list price ratio. (97.49%)

35 day increase in the average amount of time it took to sell a property. (110 days)

Southwest Tallahassee


9.1% decrease in the number of properties listed for sale

There were no sales in this price range in this area between Jan 1st 2011 and April 30th 2011 thus we have no sales data.

Summary of the $250,001-$450,000 pricerange



This price range has been marked by a decrease in the number of homes available for sale, an increase in the number of properties sold (with the exception of southwest Tallahassee, which had no sales in 2011), and a small increase in average sales price. The decrease the number of homes available for sale, the increase in the average sales price and the overall increase in the average sale price to list price ratio all are strong indicators that the housing market in this price range is improving. This market for homes in this price range seems to be shifting more towards the direction of a seller's market. However, while it is shifting in the direcition of a seller's market, it is still by large a buyer's market. Just less of a buyer's market compared to last year.


The only statistic in this price range that is not congruent with the rest of the data is the average days on the market. Overall the average days on the market to sell a home in this price range has increased from last year. However, this might not be caused by shift of supply and demand as one might assume. This could be caused by other factors such as lenders taking longer to process buyer's home loans. It could also have to do with foreclosure properties taking longer to close due to all of the recent problems banks have had with their foreclosure properties that they own.

The $450,000-$750,000 price range

Northeast Tallahassee

23.5% decrease in the number of properties listed for sale

The number of properties sold remained the same

3% increase in the average sales price

1% increase in the sale price to list price ratio

13 day decrease in the average number of days it takes to sell a home (165 days)

Northwest Tallahassee

14.2% decrease in the number of properties listed for sale.

The number of properties sold stayed the same

38.8% increase in the average sales price

13.52% decrease in the average sale price to list price ratio

55 day decrease in the number of properties listed for sale (282 days)

Southeast Tallahassee

66% increase in the number of properties listed for sale.

66 % increase in the number of properties sold

$914 increase in the average sale price

1.41% increase in the sale price to list price ratio

80 day increase in the average number of days it takes to sell a home 235 days

Southwest Tallahassee

There were no sales in 2010 or in 2011 for homes in this price range in SW Tallahassee

Summary of the $450,000-$750,000 price range

Overall, the number of properties listed for sale in this price range (with the vast majority of the properties being in the northeast part of Tallahassee) decreased in this price range. The exception was in Southeast Tallahassee where we saw an increase in the number of properties listed for sale. The exception was in the southeast, where we saw an increase in the number of properties listed for sale increase. The number of sales increased in 2011 while the average sales price stayed about the same.

In the NE and NW, days on the market decreased while average days on the market increased in the SE. Overall it appears that the market for homes in this price range has been very stable from 2010 until now. The relatively unchanged average sale price and the fact that the number of properties sold stayed about the same shows that this market is stabilizing. The fact that the number of properties listed for sale has decreased, and that the average time it has taken to sell a home in this price range has decreased from last year, shows that the market for homes in this price range in Tallahassee, might actually be improving.

The $750,001+ price range.

Northeast Tallahassee

7.3% increase in the number of properties listed for sale

Sales stayed the same

19.2% drop in the average price of a home

Sale price to list price ratio dropped by 13.22%

142 day drop in average days on the market (279 days)

Northwest Tallahassee

No activity

Southeast Tallahassee

No activity

Southwest Tallahassee

No activity

Summary of the $750,000 price range

Sales activity in this price range was very limited with only 2 sales occuring in this price range. Both sales were on the northeast side of Tallahassee. From the limited data we have in this price range, it appears that prices in this price range are dropping as well. The list to sale price ratio in this price range has fallen, indicating that buyers have more bargaining power in this price range. Days on the market to sell a property in this price range has decreased. This is most likely due to the fact that prices have dropped.

Bargain prices cause reduction of housing inventory for 2011!

Home prices have continued to drop this year to levels not seen in over a decade. This is happening locally and also around the country. This trend of prices dropping is obviously not new as this has been happening for the last few years now. However, what is new is that there are more buyers purchasing properties than we have seen for quite some time. It appears now that prices have dropped to a point where homebuyers have decided to jump off the fence and into homes.

The sharp increase in sales over the past year is causing an equally sharp decrease in the inventory of homes available for sale around the country. We are especially seeing a sharp decline of housing inventory in cities that have been hit the hardest by the foreclosure crisis. For example, in the last year Miami's housing inventory has declined by 24%, Detroit's housing inventory has dropped by 17%, and Phoenix's housing inventory has dropped by 10%. Many other major metropolitan areas have seen simalar declines in the amount of homes for sale as well.

This is good news for both the housing market and for our nation's economy as a whole. Many leading economists say that the decline of housing inventory, especially the decline short sale and foreclosure properties available for sale, is key step to the recovery of the housing market. The logic behind this is that as the supply of homes decreases, the competition among buyers for existing properties will increase thus driving up home prices again. Many real estate agents, including myself, and many buyers out there will make the argument that this is already happening.

Right now there are properties for sale that are great deals, and there are also properties that are not great deals, and there are properties that are somewhere in between. Many of the great deals out there are foreclosure properties and short sale properties. What i'm seeing out there is that the great deals are only on the market for a short period of time. Everybody is looking for a great deal right now, so when a great deal pops up for sale you usually have several offers on it within a few days after the property is initially put on the market. There is a large demand for the good deals right now. The cliche phrase i'm hearing from buyers these days is...you guessed it..."I'm looking for a great deal." As the inventory of these good deals is starting to dwindle, the competition is among buyers for these good deals is increasing. That is what I am seeing first hand.

As Mike Shannon, a real estate agent in Detroit, said "It’s like a feeding frenzy when a home goes on the market now,...We’re getting a few dozen offers on some homes in a matter of days.”

A lot of the people buying up these great deals are investors who are paying with cash. The banks are paying them very low interest for their cash deposits, so they are moving their cash from the bank into real estate where they can buy a property for cheap and rent it out earning a much better return on their money than their banks are paying them. In Tampa this past March, 35% of the homes that sold were bought and paid for with cash. In a normal market about 10% of home transactions are cash deals. With that being said, it looks like the cash paying investors out there are helping soak up the inventory of homes. And I digress: For this, we thank you cash paying investors for your contribution to our nation's housing and economic recovery! That's true capitalism at it's finest working before our eyes...and working a lot better than the government programs out there designed to help the housing market I might add.

Some economist warn that the worst may not be over though. Some economists are claiming that banks are still holding hundreds of thousands...maybe millions of foreclosure properties that they have not released onto the market yet. They say that the recent problems that banks and other financial institutions have had with foreclosures (i.e. not property foreclosing on properties, having to reforeclose on properties, clearing up title issues, ect...) have slowed down the bank's foreclosure process over the last few months, and the slowdown in the foreclosure process is the reason for the decline in the housing inventory across the country. The economists warn that when the banks start releasing the properties onto the market again at the pace they were before the foreclosure scandals and problems were uncovered, the inventory of properties will increase again, and prices will decline even further.

In conclusion, the bottom line is that many of the properties on the market today are distressed properties (short sales and foreclosure properties). Roughly about a third of the properties for sale are distressed properties. Our housing market and our economy will not recover until these properties are purchased and our housing inventory returns to normal levels. Right now it appears we are headed in that direction. If the economists who think that we are going to have another wave of foreclosure properties hit that market are correct, than this just means that the housing market and the economy is just going to take longer to recover. Of course, it also means that i'll have more distressed properties to sell before things are back on track...my own little contribution to the recovery of our housing market and the economy.

Know the Dynamics of Pricing When Shopping for Short Sales

If you are currently in the market to purchase a property, you can sometimes get a good deal if you buy a short sale property. However, as I learned a long time ago in basic economics 101, there are no free lunches. If you see a short sale property listed for sale at a price that is too good to be true, it probably is. For those of you who have been thinking about purchasing a short sale, I am going to give you some things to keep in mind when deciding whether or not to move forward with your purchase. Before that though, I am going to talk a little bit about what a short sale is and how they work. In a short sale, a homeowner negotiates a payoff amount with his or her lender to save the distressed property from foreclosure. The payoff amount the homeowner negotiates with the lender in a short sale is less than what the homeowner owes on the loan. A lender will usually agree to do a short sale because it saves the institution a considerable amount of time and expense associated with foreclosing on a property. As part of the short sale, the lender has to approve any offer that a buyer makes on the property. So how does the owner’s lender decide whether or not to accept an offer on a property? Once an offer is received, the lender will pay a third party broker, who is not involved with the transaction, to come look at the property, evaluate comparable properties, and give an estimate of value for the property. If the offer received is equal to or greater than the value the third-party broker assigned to the property, the owner’s lender will generally approve the offer. A lender generally won’t tell the homeowner, or any other party involved with the transaction, what price they will take for the property until they receive an offer and the offer is reviewed. This means that the listing agent must do his or her best job at determining the fair market value of the property and list the property for sale at that price in hopes that the lender will accept an offer at or near that price. Even if you make a full price offer on a short sale, there is no guaranty that your offer will be accepted. If the listing price can be supported by recent sales of comparable homes in the vicinity though, there should not be a problem with the lender accepting an offer that comes in at or near the listing price. However, sometimes short sale properties are not appropriately priced. I’ve seen real estate agents list short sale properties for outrageously cheap prices that are well below market value. This means that the property does not have any comparable sales to back up the listing price. If this situation occurs and someone makes an offer on the property at or below the already very cheap list price, the lender will usually reject the offer because it isn’t supported by comparable sales. When this happens, the buyer and everyone involved with the transaction ends of wasting a lot of time and effort. It can be as much as 90 days or longer before the seller’s lender responds to an offer on a short sale, so buyer’s can also miss other opportunities while waiting on the lender to respond to the offer. So as a buyer, if your offer is rejected by the lender, you’ve just wasted 90 days or however long it took for the lender to respond to your offer, and you still don’t have a home. This situation can usually be prevented. Before you make an offer on a short sale property, approach the listing agent or your own real estate agent, and ask them to provide you with at least 3 comparable sales from the same area or neighborhood that have sold within the last 6 months. Properties that have sold within the last 3 months would be even better. Also ask the agents to provide you with at least 3 comparable properties for sale in the same area or neighborhood. If the price that the property you are interested in buying is well below those of the comparable properties, the lender probably won’t approve an offer for that price it is listed at. This is because the list price is below market value, and the lender will assume they can get more money for the property. At this point it would be a good idea to ask the listing agent if the lender has pre-approved a short sale at the low price they have the property listed for. If they have, ask to see a copy of the approval letter from the lender to prove it. If the lender has not approved the short sale at the list price, you should probably make an offer that is supported by recent sales and comparable properties for sale, or you should move on and find another property. Otherwise, you are probably just wasting your time and effort.

Tips for selling your home in a competitive selling environment.

In today's real estate market, prospective homebuyers have a large selection of homes to choose from. There are plenty of great deals out there on houses...especially with all of the foreclosure and short sale properties on the market. These short sale and foreclosure properties usually sell at a discount as well. With foreclosure properties , the banks that own these properties will sell the property for cheap because they want to get rid of their forclosed properties as soon as possible so they won't have to continue paying the holding costs associated with owning the property. With short sale properties, the banks will sell the properties at a discount to ensure they sell the property so they don't have to pay the expenses of foreclosing on the property. So what this means to Joe Homeowner is that there are a lot of properties out there for sale, and a lot of the properties for sale are priced really cheap. This means if Joe Homeowner wants to sell his property and get top dollar for it in our current market, he is going to have to take steps to make his property stand out above the rest.


Today I am going to offer some advice and give some specific tips that will help you sell your property quicker and get more for your home. Here they are...I hope these tips help.

1) Price your home correctly!!!- There is a good reason I put this tip as number 1, and there is a good reason I put three exclamation points after it...it's because this is the single most important thing you can do to successfully sell your home. When trying to find out how much your home is worth, contact an experienced and knowledgeable REALTOR who is familiar with the local real estate market and who preferably has experience at dealing with properties in or near the area where your property is located. The REALTOR should be able to provide you with information on comparable properties that you will be able to look at to help you determine your property's value.

The value you of your home is determined by what prospective buyers are currently willing to pay for homes simalar to your own. Property values change over time, and there are many factors that influence what people are willing to pay for properties at a given time. However, the best way to find out what your home is worth is to look at what people have recently paid for simalar properties in the same area ( Sold Comps) and also to look at what other simalar properties in the same area are currently listed for sale at (Active comps). I would suggest looking at 3-5 good sold comps and 3-5 good active comps. When looking at sold comps, it's preferable to look at properties that have sold in the last 3 months. The furthest back you should go is 6 months. Sold comps will provide you a good indication of what someone will pay for your property.

While looking at recent sold comps is very important, it's also very important to look at active comps as well. Active comps are in essence the properties that you will be competing against for buyers, so it's important to know what competing properties are selling for. In a declining market like we are in right now, it's very important to look at active comps. For example, if the best and most recent sold comp you have for your property suggests a value of $270,000 for your property, but you have two other properties in the same neighborhood that are simalar to yours that are currently listed for sale at $250,000, it is not very likely that a buyer is going to pay $270,000 for your property when they can go down the street and get a simalar property for $20,000 less...capeesh??

Pricing your property right from the start is very important. Don't try to overprice your property at first with the intention of lowering it later. THIS WILL HURT YOUR CHANCES OF SELLING THE PROPERTY QUICKLY AND WILL CAUSE YOU TO SELL THE PROPERTY FOR LESS MONEY BY THE TIME YOU ACTUALLY SELL THE PROPERTY!!! There has been a lot of research done that shows when people price their house right in the beginning, they end up selling their home for more money, and they sell their home quicker. Here's the science behind this fact.

The first 3-5 weeks is the time period when you have the most people looking at your property. The property is new on the market so everybody wants to check it out. After that 3-5 week window is over, less and less people are looking at your home. If you have your property priced correctly during that 3-5 week window of time, there is a greater chance that one of those many prospective buyers will actually be interested in making an offer on your property. That is why properties that are properly priced from the start usually sell quickly.

If you overprice your property in the early stages of putting it on the market, those many prospective buyers that are looking at your home are going to write off your home as just another over priced property, and they will go buy the properly priced property down the street. Two months later, when you finally decide that you need to reduce the price of your home, you now don't have as many people looking at your home. This means that it is going to take longer to find a buyer. Also, if you are in a declining market, the price you need to list it at for sale now is probably lower than the price that you should have listed it for sale two months ago....and so begins the price reductions, or as I like to call it "Chasing the market." Now you might have to keep chasing the market (lowering the price of your home) until you finally entice someone to buy your home. This process could take a long time, and you could end up losing a lot of money. If you would have just priced the property correctly from the beginning, you would have received more money and sold the property quicker, and than that's where I get to tell you "I told you so." I'm just kidding. I won't say that to you... i'll just be thinking that.

Moral of the story, price your home right from the start and it will sell for more money, and it will sell quicker. Get an experienced and knowledgable REALTOR to help you analyze quality recent sold comps and similar actively listed comps. If you really want to get fancy and ensure you have a good estimate of the value of your home, you can have an appraisal done on your home by a liscensed property appraiser. This will cost you about $400-$500, but it will ensure that you know the true value of your home.

2) Curb Appeal-The outside of your home is the first thing that people see when they pull up to view your home. If prospective buyers are unhappy with the appearance of the outside of your home when they first pull up to view it, it's going to get them in a negative frame of mind so that when they go inside your home, they will probably be pointing out all of the faults they see instead of focusing on the positive features of your home. Think of the outside of your home and the curb appeal that your home portrays as your chance to make a good first impression on prospective buyers. You always want to make a good first impression! Below are some specific tips.

• Keep your lawn mowed, your trees and bushes trimmed, keep your yard raked, and pull up and remove any weeds and/or dead plants
• Clean off your roof and clean out and repair your gutters if need be.
• Spruce up your front door by slapping on a fresh coat of paint or repairing any rotten, damaged door seals and thresholds. If need be, think about replacing your door. A new door is one of the top items for recovering it's value when you sell your home.
• Pressure wash the siding of your home, any sidewalks, porches, pool areas, ect... that might need pressure washing.
• Clean or replace any damaged light fixtures.
• Keep all porches and sidewalks swept.
• Plant flowers along walkways
• Clear out any excess clutter from your yard.

3) Bring your old floors back to life-From working with many buyers and from my experience with showing many properties, I have been able to see what are some of first things that buyers notice when they look at homes. I can tell you without a doubt, one of the first things that buyers mention about a home they are looking at is the floors. If you want to impress buyers, make sure that your home boasts some nice floors.

If you have hardwood floors, make sure they are clean and shining. If the wood is old and dull looking, have the floors cleaned and polished. If need be, have the floors sanded down and re-sealed as well. If you have tile floors, have the tiles professionally cleaned or go rent a tile cleaner. Also be sure to clean and re-seal the grout between the tiles. If you have carpet floors, have the carpets steam cleaned or replaced if need be. If you have any type of laminate flooring, be sure the floors are cleaned and replace any damaged sections.

4) Slap on a fresh coat of paint-When it comes to top items that buyers take notice of, I would have to say that the paint is up there with the flooring. The good news about this is that painting is one of the cheapest and easiest things you can do to improve the look of your home. A nice paint job can really bring the house to life. If your home is in need of a paint job, go to a local paint store or contact a good painter and talk to them about and get advice on painting your home. They should be able to tell you what kind of paint you need to use throughout your home, and they should also be able to give you good advice on good color schemes, what brands of paint to use, ect...

Also, if there is any damaged sheet rock, baseboards, doors or door frames, have those items repaired or replaced as well before you paint.

5) Check and fix problems with all major systems in your home-Before you put your home up for sale, be sure to have all the major systems in your home checked out. This includes the electrical system, the plumbing system, the heating and cooling systems, the roof and the structure of the home. If there are any problems with any of those systems, a prospective buyer will find it later on when they have the property inspected. It is much better to discover the problems before you sell the home. That way you can either fix the problems ahead of time or you can disclose the problem up front to prospective buyers and price the home accordingly to take into account for the problem.

If you have the ability to do so, I would suggest fixing any problems with any of the above mentioned systems before you decide to sell the property. By fixing any of the problems with any of the major systems it actually helps in two ways. First off is the obvious reason. You have fixed the problem, and the buyer now won't get freaked out because they think they are going to have to spend a whole lot of money to fix something. Second is that if you fix the problem, it gives you the opportunity to show prospective buyers that you are the kind of person that maintained their home well, and this will make buyers feel a lot more at ease when they are thinking about buying your home. Trust me, this is big. This leads me into my next main point.

6) Save all of your receipts for any repairs, regular maintenance, renovations or upgrades you have done to your home, and have them available to show to prospective buyers-If you can show buyers all of the receipts for all of the repairs, regular maintenance, renovations, or upgrades related to your home, this will help you sell your home. You might not know this, but the decision to buy a home is not mostly a logical decision. It is a decision based largely on emotion. When a person buys a home, they want to feel good about buying the home. They want to feel comfortable and at ease. One of the best ways to make a buyer feel at ease when they buy a home is to show them that you have done a good job at maintaining your home. This sends all kinds of good messages, but the main message it sends is that the buyers don't have to worry as much about any hidden problems because you maintained your home well.

Remember my point from earlier. In this market you are competing against a lot of distressed properties. One of the disadvantages of buying a foreclosure or short sale properties is that you don't really know all of the problems that these properties have. If you can show that your property has been well maintained, this will give you a competitive advantage and will help you win over the buyers who are also thinking about buying a short sale or foreclosure property.

7) Offer to pay for buyers closing costs/ and or repair allowances-A lot of times when people are buying a home, they make enough money to make the monthly payments on the home loan that they are getting to purchase a home, but they may have a hard time coming up with a large amount of cash that is needed for both the down payment and the closing costs associated with buying the house. This seems to be especially true amongst young first time home buyers who have good income but who have not accumulated a large reserve of cash. If you offer to pay for all or at least a certain amount of a prospective buyers closing costs, you may attract a whole new group of buyers that you would not have attracted if you were not willing to pay for the buyers closing costs.

Really you have no reason not to offer to pay for buyer's closing costs. You can pay for buyer's closing costs and still receive the same amount of money from the sale of your home as you would even if you didn't pay for the buyer's closing costs. You just simply increase the price of the home by the amount of closing costs you are offering to pay to the buyer at closing. If the buyer is getting a loan to pay for your home, this will make his/her loan amount and his/her monthly payment a little higher since you are increasing the purchase price of the home, but he/she won't have to come with several thousand dollars out of pocket to pay for the closing costs. However, you will net the same amount of money. It's a win-win situation.

You can also apply this situation to any repairs that the buyer might want completed on the home. For example, let's say your property needs a new roof. The cost for replacing a new roof is $4000 for your home. The current amount of money that the buyer is willing to pay for your home is $170,000. The buyer could purchase your home with the bad roof for $170,000 and just fix it on his own after the closing, but he does not have $4000 in cash to replace the roof anytime soon, and the roof needs to replaced very soon. So what you and the buyer agree on is that you will give him a $4000 roof allowance at closing and you all will increase the purchase price of the property to $174,000. Since the buyer has good income, he can afford to increase his loan amount by the $4000 that he will need to since you all agreed to increase the purchase price of the house by $4000. The buyers monthly payments will be a little bit higher, but he won't have to pay $4000 out of pocket to pay for the roof. You will net the same amount of money as if you had sold the property to him for $170,000 and not paid for the roof to be fixed. Again it's a win, win situation.

Being flexible with offering to pay for buyers closings costs and/or allowing repair allowances will give you a competitive advantage over a lot of the foreclosure and short sale properties that are listed for sale. Many banks don't want to offer closing cost assistance or repair allowances to buyers. I'm not sure why they don't, but they don't. For this reason, a lot of cash strapped buyers can't purchase those properties. If you offer closing cost or repair allowances to those cash strapped buyers with good jobs though, they might just buy your home.

8) Eliminate unpleasant odors- If you want to turn buyers off from buying your home, having a stinky house will do the trick. If you are serious about selling your home, make sure your home is free of unpleasant odors. You can accomplish this by keeping the home clean and dry. Also, you can invest a small amount of money into some of those plug in air fresheners that usually last for a month or two.

9) Keep your home clean and uncluttered- Before you list your home for sale, make sure that your home is clean and presentable. You can either spend the time and clean the home yourself or have a cleaning service come in and clean your home. Having a dirty home can turn buyers off.

In addition to having your home cleaned, you should make sure that your home is neat and uncluttered. Don't have stuff just laying around everywhere. All of the extra stuff that is laying around your home should be stored away. Too much clutter distracts buyers and it can also make your home appear smaller than it actually is. Another tip is to take down all of the family pictures on your walls and around your home. It's harder for buyers to picture the house as their home when your family pictures are all over the house.

10) Have your A/C system cleaned and serviced-When a buyer purchases a home, they will almost always have the property inspected by a home inspection company. One of the most common negative things that home inspectors put on the home inspection report is that the A/C system needs to be cleaned and serviced. This small negative item that inspectors often note on their inspection report sends a message to the buyer that the current owner has not done a good job of maintaining their home. It's only about $100-$150 to have an air conditioning company come out and clean and service your A/C system, so go ahead and spend the money to get it done. It will make it easier to sell your home if you do.

11) Install closet organizers in your closets- One of the most common complaints about a home that buyers have is that the home does not have enough closet or storage space. Closet organizers are cheap and pretty easy to install, and they will provide your home with more room to store stuff away which will appeal to prospective buyers.

Conclusion

We are in a competitive real estate market these days. With all of the foreclosures and shortsales that are for sale at bargain prices, home owners must now go above and beyond to make their homes stand out above the rest in order to attract home buyers. However, there are still buyers out there who will pay a little bit more money for a nice house that is in tip-top condition. If you follow the tips I have outlined here today, you will be a lot more likely to entice one of these buyers to make an offer on your home.

If you have any questions about any of the tips in this article or if you have any questions about other things you can do to get your home sold in this tough market, please feel free to contact me by phone at (850) 567-0037 or via email at nahoom1171@yahoo.com. You can also write me on my blog.

Tips to successfully purchasing foreclosure and/or short sale properties.

As you have already probably read in the news and heard in the media, our real estate market is currently flooded with distressed sales, both foreclosures and short sales. I am quite confident that in 2011 the glut of foreclosures and short sales currently on the market will not only remain constant but will grow larger. If you are currently in the market to purchase residential real estate or if you will be in the market to purchase residential real estate within the next year or two, there is a very good chance that you will end up deciding to purchase either a short sale or a foreclosure property. I don't blame anyone for wanting to purchase a foreclosure or a short sale. You can end up getting a great deal if you do. However, there are certain risks associated with purchasing these types of properties, and there are all sorts of problems you can run into. Today I am going to provide you with some tips that will help you minimize these risks and help you avoid potential pitfalls that could end up costing you both precious time and money.

1) Choose a Realtor who has ample experience at dealing with and successfully closing on foreclosures and short sales.

If you make a decision to purchase a short sale or a foreclosure property, it's important to have a Realtor in your corner who has the experience that is needed to overcome potential obstacles and problems that can come up along the way toward closing on one of these properties. An experienced Realtor can provide you with a wealth of knowledge and resources to make the transaction as smooth as it possibly can be.

When choosing a Realtor to represent you if you buy a short sale or foreclosure, be sure to ask the Realtor how long have they been actively working as a Realtor in the area you are looking to buy, how much experience they have at dealing with foreclosure and short sale properties, and how many foreclosure and short sale properties have they closed on.

From my experience, there are all kinds of problems that can pop up when you are dealing with distressed properties. Having an experienced real estate agent that is familiar at dealing with these types of properties can be the difference between you closing on the deal and the deal falling through.

2) Go to a lender or mortgage broker and get pre-qualified for a loan before you begin your home search.

If you are paying cash for a property, this does not apply. However, if you are going to be obtaining a loan for purchasing a property, you need to go to a lender or mortgage broker and get pre-qualified for a home loan before you start your home search.

If you are purchasing a foreclosure property, the property is usually owned by a bank or some other type of financial institution. These financial institutions that have acquired properties through foreclosing on the properties are serious about selling these properties because they don't want to own them. With that being said, if they have a prospective buyer for one of the properties that they own, they want to make sure the buyer has the ability to buy the property in question of being purchased before they take the property off of the market. Banks who are trying to sell off their inventory of foreclosure properties will not even look at an offer unless the buyer has provided them with a pre-qualification or pre-approval letter stating that the buyer has the ability to buy the property for what they are offering to purchase the property for.

With a short sale, the property has not been foreclosed on yet, but the current owner's lender, who the owner has his/her home loan with, still must approve the buyer's offer in order for the deal to close. From my experience with short sales, the owner's lender will always require that the buyer provide a pre-qualification letter with the offer on the property. Again, if the buyer does not do this, the seller's lender will not even look at the offer.

Banks and lenders have a lot of foreclosure properties on their books that they want to get rid of, and they also have a lot of short sales that they are trying to get sold so that they don't have to foreclose on those properties. They don't have time to waste. If they took offers without being sure the buyer has the ability obtain the loan that they need in order to purchase the property at hand, these banks could end up doing a lot of work thus wasting a lot of time and money. For this reason, they won't look at offers where the buyer is getting a home loan unless the buyer can prove they have the ability to get the loan they need to buy the property. You must get a pre qualification letter from a lender before you start searching for foreclosure or short sale properties.

If you don't know of any good lenders out there who can help you obtain a home loan, visit my website at http://www.bobbynahoom.com/ and click on the "preferred lenders and partners" tab on the left hand side of the screen.

3) If you are looking at buying a short sale, ask if the property is an approved short sale at the listing price. If not, ask the listing agent to provide you with a list of comparable properties that have recently sold.

If you have found a short sale that looks like a great deal, you need to find out some information before you start moving forward with the property. Remember that with short sales, the properties have not been foreclosed on yet. However, the owner's lender still must approve the offer that you make on the property. So the question is "how does the owner's lender decide whether or not to take an offer on a property." Once an offer is received, the owner's lien holder will usually pay a third party real estate broker, who is not involved with the transaction, to come look at the property, evaluate comparable properties, and give them their estimate of value. If the offer is in line with or is higher than the value that the third party broker assigns to that property, the owners lender will usually approve the offer.

However, the owner's bank will usually not tell the owner or the agent listing the property, how much they will take for the property before they receive an offer on the property. This means that the listing agent must list the property for what they perceive the market value is. I have seen agents list short sale properties for outrageously cheap prices that are well below market value. This means that they usually don't have any comparable sales to back up the price that they have it listed for sale at. If that happens and someone makes an offer on the property for the price they have the property listed at or below the already very cheap list price, the owner's lender will usually reject this offer because the offer can't be supported by comparable sales. When this happens, you can end up wasting a lot of your time and effort. With short sales, it can sometimes take up to 90 days before you get an answer from the owner's lender about your offer, so you can also miss other opportunities as well while you are waiting on an answer.

This situation can usually be prevented. Before you make an offer on the short sale that you have your eye on, approach the listing agent or approach your real estate agent who is representing you and ask him/her to provide you with at least 3 comparable sales from the same area or neighborhood that have sold within the last 6 months. Within the last 3 months would be even better. Also, ask the listing agent or your real estate agent to provide you with at least 3 comparable properties in the same area or neighborhood that are currently listed for sale. If the price that the property is listed for is well below the prices that these comparable properties suggest that the property you are interested in should be listed at, than chances are the the owner's lender won't approve an offer for the price it is listed at.

At this point you would need to ask the agent who is listing the house for sale if the owner's lender has pre-approved this short sale at the low price they have it listed for sale at. If they do, ask to see a copy of the approval letter from the owner's lender/lien holder. If they have not approved the list price, you should probably make an offer somewhere in the price range of the comparable properties you looked at, or you should move on and find another property. Otherwise, you will most likely be wasting your time and effort.

4)If you are purchasing a short sale, see if you can get a Seller's Property Disclosure filled out by the owner of the property you are buying.

A seller's property disclosure is a form that the owner of a property sometimes will fill out when they are selling their home. These seller's property disclosures have useful information about the property including the plumbing, electrical, and roof systems, whether or not the property has had any trouble with termites or any other wood destroying organisms, the condition of the appliances, any additions or remodeling that was done to the property, ect...

A seller's property disclosure is no substitute for making sure you have the property properly inspected, but they can provide you with useful information about the property that you can look at to screen the property before you go spending your hard earned money on inspections.

Please make a note that if you are buying a foreclosure property, the owner of the property will pretty much never provide you with a seller's property disclosure. This is because foreclosure properties are usually owned by some financial institution halfway across the country, and they probably know next to nothing about this property they own that you are interested in buying. So with foreclosures, make an extra effort to have the property carefully inspected.

5) Always make sure you order a general home inspection to be done by a licensed and experienced home inspector.

You are about to make a big investment. Before you go ahead and spend all of this money to purchase a property, it's a good idea to have the place carefully inspected so you know you aren't buying a pig and a poke. With a general home inspection, the home inspector will look at the heating and cooling system, he will evaluate the general condition of the roof, he will check out the plumbing and electrical system, he will check for any signs that suggest the property has any structural or foundational issues, and he will also check the condition of all of the appliances in the house. Also, if the inspector sees any other misc. problems, he will make note of those issues in his report as well. If there are any serious problems with any of the big ticket items such as the plumbing, roof or the electrical system, the inspector will usually recommend further inspection by a specialist. For example, if the plumbing was all messed up, the home inspector would recommend to have the plumbing checked out by a licensed plumber to give you an idea of the extent of the repairs that are needed.

When buying foreclosures, home inspections are even more necessary. Again, this is because the owner is probably a bank that knows nothing about the property, so it's up to you to discover any unknown or undisclosed problems. Also, from my experience, a lot of the time foreclosure properties have not been lived in for a while, and they are often beat up and in poor condition. As the old Latin saying goes.... Caveat Emptor. Translated to english...buyer beware. Applied to this situation...get a home inspection done before you buy a distressed property.

For a list of good home inspectors, you can visit my website at www.bobbynahoom.com and look under the "preferred lenders and partners" tab.

6) Always get a wood destroying organisms inspection (WDO inspection) done before you purchase a distressed property.

Termites, wood rot, powder post beetles and other wood destroying organisms can end up costing you a lot of money in repairs. Before you purchase any property, you always need to have a WDO inspection done. These inspections cost around $125, but could save you from buying a property that requires thousands of dollars in needed repairs caused by termites or other wood destroying organisms.

7) Have the property inspected for both Radon Gas and Mold.

Radon Gas-Radon Gas is an odorless and colorless gas that can come up into your home from the soil underneath the house. The gas can accumulate in the slab, crawl space or basement in your house and seep into your home. Radon gas runs randomly in veins of soil. This means that your neighbor could have radon gas issues while your home is free of radon gas. Radon gas can cause lung cancer over a long period of time. In Leon County, statistics show that 1 in 4 homes have radon gas levels above the level that Environmental Protection Agency deems safe.

The two home inspection companies that I have on my website will perform a radon gas inspection. If you are getting a home inspection done by one of these companies, they only charge a small additional fee to also include a radon inspection.

Mold-The weather conditions here in Tallahassee most of the year are perfect for mold growth. Tallahassee is hot and humid most of the year. A warm and moist environment is just what mold needs to grow. A lot of the time, short sale and foreclosure properties have been sitting vacant with no air conditioning to cool the place and keep the air dry. If there have been any water leaks in the property, this will make matters even worse. Water leaks plus no air conditioning could mean that the property could have serious mold issues.

Mold can cause serious health problems. Many home inspection companies, including the two on my website, will also do a mold inspection. If you are already getting a home inspection, sometimes these companies will only charge you a small additional fee to have the inspection done.

8) If the home you are looking to buy is built before 1978, you should get a lead based paint inspection.

Inhaling only small amounts of lead based paint dust can cause serious health issues...especially among infants and small children. Southern Home Consultants, one of the inspection companies on my website, does lead based paint inspections. You can also search the internet for lead based paint inspectors.

9) Be Sure to purchase owners title insurance, and have a title search done on the property before you close on the property.

Before you close on a short sale or a foreclosure property, you need to make sure you have a title search done, and you need to make sure that you also buy title insurance.

When a title company performs a title search, they go through the chain of ownership back as far as the property has been listed on public record. They make sure that the person you are buying the property from actually owns the property and has the right to sell it to you. They also make sure no one undisclosed owners own the property. The reason for this, is that you don't want any undisclosed owners coming around later on saying they own the property still since they did not sign off on selling the property to you. Also, when the title company does a title search, they check to see if there are any liens attached to the property. If there are, the seller has to take care of removing the liens before they can sell you the property. Unless you want to assume the liens...which I would advise against.

In addition to performing a title search, the title company is going to provide you with an owner's title insurance policy. The owner's title insurance policy will basically cover you in the event that the title search fails to discover any of the potential title issues I mentioned above. Title insurance is just a one time fee that you pay at closing. It's well worth the investment.

Having a title search and getting title insurance is very important...especially if you are purchasing a short sale or foreclosure property. A lot of the time with short sales, you will have liens attached to the property. The owners have not been paying their mortgage payment, and a lot of the time they have not paid other bills including homeowners association dues and their might be liens attached to property. A title search would discover those liens. With foreclosures, there have been many issues lately with banks not properly foreclosing on properties, and the previous owners who were foreclosed on sometimes come back and claim ownership of the home. With this type of issue, an owners title insurance policy would cover you.

Moral of the story, before buy a distressed sale, make sure you have a title search done and purchase an owners title insurance policy.

Conclusion

You can get a great deal if you purchase a short sale or foreclosure property. You just need to make sure that you are careful and prudent going into it. You can run into a lot of problems with foreclosures and short sales. If you take my advice and follow the tips I have suggested here today, you will have much less of a chance of running into unpleasant surprises after you close on the property.

If you have any questions about purchasing a foreclosure or short sale property, feel free to email me at nahoom1171@yahoo.com or give me a call at (850) 567-0037. You can also write to me on my blog.