Second, there is NO OIL here on our beaches and we are not expected to have to deal with this–at least not locally.  This is STILL a good time to buy here.  Some buyers will not be fully informed and may decide to wait.  This could be good news for those buyers that take the plunge and go ahead and make an offer—less competition!

Some interesting facts:  As of July 1, 2010 foreclosures account for 16% of the market, short sales 43% of the market and regular sales 41%. 

Even more interesting is how we are selling those properties:  As of July 1, 2010 foreclosures account for 42% of our year to date sales, short sales are 21%, and regular sales are 37%.

Two factors that are clear.  Demand for foreclosures is greater than supply.  They account for only 16% of our market but, log in at 42% of our sales.  And on the opposite spectrum, short sales are 43% of our market but only account for 21% of our sales.

Although this looks confusing, there really is an easy answer.  The perception with buyers is that foreclosures are a better deal and they are quicker to close.  While, they definately are quicker than short sales to close, they may not always be a better deal.  There is so much buyer interest, a typical foreclosure is bid up well above asking price by half a dozen buyers or more.

To the contrary, with a short sale, an offer is made at or somewhat below asking price and generally there is only one buyer submitted for approval.  Plus, on average it takes 4 months to close.  But, guess what!  Our average sale price has been increasing since the 4th quarter of last year.  So, an offer today at close to asking price will be a “deal” in 4 months when it is time to close the sale.

And finally, the good news is that the short sale lenders are putting into place the means to process these sales sooner.  I actually had one completed in about 5 weeks!

Judy Ramage, Re/Max Realty Team/Broker Associate/ABR, CDPE, CRS, 239 242-2005

judy@capecoralwaterfront.net

But, hold on!  It is the BOTTOM of the real estate market that is increasing, not the entire market.  What that means is the very cheapest houses for sale are not quite as cheap as they were but, still incredible deals.  You can buy a resale  house for less than half of what it would cost to build.  That’s certainly a buy.

In the Cape, we have several categories of “Bottom of the Market”.  Certainly the cheapest houses listed but, also the cheapest gulf access houses listed.  What you used to buy for $175,000 now costs you around $200,000 and the inventory in that price range has dropped drastically.

Overall, there are still deals out there for savvy buyers but, you have to act fast on those deals.

For sellers, unless you are priced at the bottom of the market now, then you will STILL be WAITING to see an increase in your price category.  The good news is that there are buyer’s looking, are you priced to sell to them?  There are sellers that want to sell either to downsize or move up.  It is really OK to price your house competively because what you spend will be relative to what you sold for…ie… you made less on your house but, you paid less on the one you bought.

A seller that is selling and not repurchasing will be the one that will not reap the benefits of this bargain market.  But, even for them there are still upsides to selling.  If you have money invested in something–say a house–and it is bringing you a negative return on your investment, why keep it?  In most cases, you are better off to sell and invest your money elsewhere.

So, there you have it.  We are seeing a slow recovery but, it is recovering.  This is certainly a step in the right direction.

Judy Ramage, ReMax Realty Team, Broker Associate, 239 242-2005

1) Condition: Believe it or not, condition of the property does not make the top three in the priorities list. The reason is simple and that’s because even the worst properties can be fixed up. Now, I know that you are buying a home on a budget and may not have the resources to fix it up, but it doesn’t have to be done all at once. A project can happen slowly overtime, and if you are even remotely handy, it can be done with some classes at a home depot, a small budget, and a little hard work. 

2) Pool–Everyone that moves to Florida wants a  POOL.  It is the Florida dream.  But, because of a buyer’s limited budget many have to sacrifce this item.  That is really Ok.  You can always add one later.  In addition, many contractors are out of work (including pool contractors) and would love to give you a great price to have the job.  If your budget is limited, get a better house and give up the pool for now.  Put it in later.

3) Layout: I hear this more often than you would think, “I don’t like the layout.” Layouts for the most part can be changed as long as you are not attempting to move a load bearing wall.   Plumbing, electric, HVAC, and yes, rooms can be changed or moved.   The nice thing about many Florida homes is that they are concrete block and ONLY the outside walls are load bearing

Remember, stick with the big three priorities: location, location,  and size of the home. If you did well in those three categories, you got a great buy and a home that will be a good investment.

Judy Ramage, ReMax Realty Team, Cape Coral, FL,  website:  judyramage.com

Ok, so you only have so much money to spend on a new home. You are realistic about what you can buy with that money and after looking at quite a few places, you know that you are not going to be able to get everything you want. The question now becomes: ‘What things do you sacrifice and what characteristics are critical for a good investment?’

Here’s a quick checklist of how you should evaluate buying a home on a limited budget. I have broken it up into two categories, “Must have’s” and “Not Necessary.”

First, if you stick with these “Must Have’s,” you’ll never go wrong and your house will not only be an enjoyable place to live, but a good investment should you decide to sell it.

1)    Location, Location, Location: The critical things to look for are: Is it in a desirable neighborhood where people want to live? Are homes always in demand in this neighborhood? Is it in a good school district? Is it at the end of the cul-de-sac or a non busy street? Does it have a view: back to the mountains or a greenbelt? And how are the other homes in the neighborhood?
2)    Size: You should always be looking to buy the biggest home for your money. There is no such thing as too many bathrooms and bedrooms, but it is a problem when there are not enough.
3)    Land: Yard size is still a big deal. At least it is in Denver, Colorado. Everyone wants more yards and it’s hard to come by so get the biggest lot you can. If you bought a home that sits on a 3200 sq ft lot, you may have a tough time reselling that home.

There are a variety of things that you can live without and shouldn’t be a top priority if you are buying a home on budget. Next week, we’ll take a look at the checklist of items that you might consider sacrificing before buying a new home.

There is one change I would make for the Cape Coral Market.  Most of the city is carved into 80 x 125 homesites (Called a two-lot site).  There are buyers that look for 3-lot sites and corner lots and find value in them, however, the taxes on a property are based on the assessed value of the property and a bigger lot garners a bigger assessment, translating to more taxes.  As a result, this is not as strong of a criteria as in Denver, Colorado.

Judy Ramage, ReMax Realty Team, Broker Associate, e-mail:  judy@capecoralwaterfront.net

Experienced home flippers know that there are pitfalls to any promising piece of property, and avoid the most obvious ones. You can, too. Learning from others’ mistakes can result in huge rewards if you find you are ready to start a home flipping business.
The following are pitfalls and mistakes to avoid and how to work some of the situations to your advantage.
1. If your financial situation is not healthy, don’t start flipping just yet.
If you do not have the following necessities in place, put flipping on the back burner for now:
* Full-time job.
* Income that allows you to put away 10 percent of your monthly income for savings or retirement.
* Six months of income already put away in either a savings account, CD or some other form of liquid holding that draws interest.
* Account separate from your savings or CD with $10,000 for repairs on your future investment.
* Potential investment partner or partners.

2. Don’t use a stated income loan, better known as “liar loans.”
Stated income loans were created to help individuals with variable income qualify for home loans – e.g., small business owners or those who work sales commission jobs. Very little or no proof of income is required for stated income loans; although, they typically charge a higher interest rate to cover the risk.

3. Don’t be untruthful on your loan application.
It is a federal crime to lie on a loan application. You may get the loan, but, if you are caught, you face charges of mail fraud, wire fraud, bank fraud and possibly others. Common fallacies submitted on mortgage applications include an overstatement of income, understatement of debts, and a commitment to live in the home as the primary residence.

4. Don’t start without a business plan.
If you don’t have a personal financial budget, create one. Then, create a business financial budget that indicates how much you have set aside and what you can allocate out of every paycheck for repairing future properties. If your business plans falls short of savings for repairs, wait to flip until your finances are healthier.

5. Don’t take on too many projects at once.
Start with one property. Once you get your feet wet with a successful flip, go on to another one. Don’t get in over your head with too many properties. Unless you have partners who are committed to jumping in with both feet with you, it will be in your best interest to proceed cautiously.

6. Don’t buy a home site unseen.
Never, ever, buy a home site unseen. It doesn’t matter if it is located in the classiest part of town, the asking price is lower than half of what area homes go for and the seller is willing to pay your closing costs. Simply put, don’t do it.

7. Don’t buy a home with structural problems.
Structural problems, like a leaky basement or cracks in the foundation, are an invitation to huge out-of-pocket expenses. Even if you have an expert assess the situation and a licensed contractor who is willing to do the work, but still allow you a healthy profit, you don’t know that the job won’t still turn south on you once you sign on the dotted line. Don’t dive into that pond of possibilities.

8. Don’t buy the property unless you can afford to carry the mortgage if doesn’t sell quickly.
Unless you have monthly income that covers all your expenses and can pay for another mortgage, ignore that flipping itch for now.

9. Don’t quit your day job.
You find THE home that is going to net you a pretty penny, one that will pay your salary for a year, and you think, “I can quit and do this full-time!” Think again. You may net a year’s salary from the flip; however, you may not be able to do it consistently. Wait until you see that you have the knack for turning properties at a significant profit, and then consider quitting your day job.

10. Don’t start without a good exit strategy.
Good intentions don’t necessarily develop into dollars. Even if you’ve done all your homework, followed the ten steps to successful flipping and received a great interest rate on your financing, the situation still has the potential to go south. You received the loan you wanted, performed all the remodeling necessary and you’re sure the home will sell the day it hits the market … but it doesn’t. You go through several months of mortgage payments only to find that it simply isn’t selling, no matter how much you cut the price. Do you have an exit strategy? Maybe you can rent the property out, rent it out with the option to buy or have someone else assume the loan with little or no money down. Whether you run into remodeling that will cost you more than you anticipated or other unforeseen problems, you need to consider all the possibilities that could occur and have a good exit strategy.

Judy Ramage, ReMax Realty Team 239 242-2005

It is said there are 7 deadly sins, I say there are 7 deadly myths being circulated about short sales.

1)  Short Sales are impossible and never get approved.  FALSE

     TRUTH:  Short Sales are more difficult, You need to learn a new process, They are NOT impossible.  This is definitely not an impossible process.  While there are no guarantees in any transaction, more and more short sales are being approved monthly.  However, an agent MUST be educated on the process, or it will be nearly impossible.  My success rate is about 99.9%.  I don’t take no for an answer but always look for a solution to any problem.

2)  Banks are NOT accepting Short Sales; They are waiting on a bailout.  FALSE

     TRUTH:  The reality is that banks have already been bailed out, and are really trying to do anything they can, within reason, to avoid foreclosing on a property.  More banks are aggressively pursuing Short Sales and Agents who understand how to process them.  It is strictly business, it costs the bank (in most cases) far less to short sell than to foreclose. 

3)  You must be behind on your mortgage in order to negotiate a short sale.  FALSE

     TRUTH:  At one time this was true, but today, this has almost all together reversed.  Today lenders are looking for verifiable hardship, monthly cash flow shortfall or pending shortfall and insolvency.  If you meet these three requirements and are in a position where you will soon not be able to afford your mortgage, now is the time.   Some few lenders still hold on to this rule, but they are few and far between.    In fact, most lenders in any circumstance would rather sell short than foreclose.

4)  Buyers are not interested in short sales and avoid them.  FALSE (mostly)

     TRUTH:  Some buyers are not interested because of the time it takes, especially with time constraints like the first time homebuyer credit.  On the other hand, many agents are getting calls from buyers who say “I only want to look st foreclosures and short sales.”  These have become synonymous, not with issues, but with Good Deals. 

5)  Listing a home as a short sale is an embarrassment.  FALSE

     TRUTH:  Most sellers don’t want the world to know they can’t pay their bills, but according to recent estimates, 1 in 5 homeowners in the US owe more on their house than it is worth.  Even wealthy owners have to stop the bleeding somewhere.  Most sellers are to be congratulated for admitting they need help, taking action and finding a professional who can work toward a solution. 

6)  The bank would rather foreclose than bother with a short sale.  FALSE  FALSE  FALSE!!

     Truth:  This myth started with collection people working for lenders on commission.  The reality is that banks do not want to foreclose on property, it costs too much.  An average foreclosre can cost the bank up to $40,000 and they still have holding costs, insurance, realtor fees, etc. and still get less than market value.  Do the math, which would you do?

7)  There is not enough time to negotiate a short sale before a foreclosure.  FALSE

     TRUTH:  This is a myth that hurts homeowners.  Many don’t realize that the foreclosure process is lengthy.  It can take a year or more, and if an attorney gets involved, it can be stalled far longer.  Almost all lenders will stall a foreclosure with a legitimate contract for short sale.  So if lis pendens has been filed, no worries, that’s just the beginning.  If it is slated for the courthouse steps, hurry up, if there is an offer you may be able to stall. 

Judy Ramage ReMax Realty Team CDPE* (Certified Distressed Property Expert).  I can navigate your short sale!

The average agent in our MLS sells just 2 houses a year!  Many of the agents have “other” careers.  They are part time and work elsewhere full time.  If your agent returns your calls in the evening you may be working with a part time Realtor.  It is not a crime to be part time but, do you want someone that “dabbles” in real estate or an agent that has made this their full time career?

It is true the top 20% of the agents sell 80% of the properties.  I average between 40-50 properties a year personally and have other agents that work for me that also sell a good number of homes.

I cannot begin to tell you the stories I have heard from buyers and sellers regarding their agents.  Agents that had to call off showing appointments because they were called into their other careers, and agents that listed someone’s house but, did nothing to market and sell it. 

So, my advice to those of you that want to buy or sell–ask your prospective agent how long they have been in the business and whether they are full time or not.  It could save you some frustration in the future.

Judy Ramage, Broker Associate Re/Max Realty Team 239 242-2005, judy@capecoralwaterfront.net

As unstable as the stock market has been, it may be time to look elsewhere for investments.  May I suggest real estate.  At this point nationally, real estate is still in a battered state.  It is the perfect opportunity to pick up some VERY good deals.  In fact, I have had some very WISE clients over the last year that have done just that! 

In our area (Cape Coral) you can pick up property for way less than it costs to build it.  This is why our construction is down so much.   The nice thing about owning real estate is that it is a tangible asset.  You can see it and feel it versus stocks and bonds which are considered intangible.  There are properties here that are generating a positive cash flow and others that are at a break even but, that have huge potential for future appreciation (think gulf access). 

If you have been sitting on the fence, now is the time to get off.  We had a 3.8% INCREASE in the average sale price from October to November and this trend has been occuring for the last several months.  Purchase now before it is too late!  If I suddenly won a million dollars in the lottery, I would invest it in this area’s real estate.

Judy Ramage, Broker Associate, ReMax Realty Team, Cape Coral FL, 239 242-2005

Recently, a fellow agent of mine received a call from a cash buyer that could spend a maximum of $20,000.  The buyer compained that he had called several other agents and they were not returning his calls!   Now I don’t know about your market but, in ours a purchase in that price range is one of two things.  Either it is in an area “most people” would not want to live or it is in a remote part of the county where there is nothing around. 

The agent took the time to set him up to receive new listings as they came on the market.  So far so good.  Well, all of a sudden my fellow agent  is receiving 3-4 calls a day from him asking such questions as;  “How far is this house from xyz intersection?”  Will they take a contingency on me refinancing my house? (This was were he was getting the “cash” to make his purchase, although originally the agent was told he had the cash in hand), and Can you go and take lot’s of photos for me? 

Frankly, this is what is called, a low end NEEDY buyer and my fellow agent simply did not have the time to deal with this.  You may not be aware but, the average agent spends upwards of 33 hours working with a buyer up until the closing table and it is about 3 times that amount when a property is a short sale.  So, basically the agent would have made below minimum wage to continue working with this needy buyer.  Now my fellow agent is a professional and he did not abandon the needy buyer.  He simply referred him to another agent new in the business that would accept the referral.  BUT, many agents would have simply STOPPED returning his calls.

There is one other type of agent that does not return your calls or stops calling you.  This agent is the one that has presented several LOWBALL offers on your behalf despite the fact that he has advised you that your offer is too low and will not be accepted in his area or market.  If you are not listening to the agent as to what is an acceptable offer or what the “average” offer is when compared to offer price and list price, then he feels he is wasting his time working with you and simply moves on.

There are wonderful deals out there that are yours for the taking but, you must do some of your own research.  With the internet, we have so many tools at our disposal.  Also, if your agent gives you advice do a little “checking” to make sure the advice is valid and then if it is:  TAKE IT!

I do return my calls so, if you have questions about this post, please feel free to call or e-mail me.

Judy Ramage, Broker Associate ReMax Realty Team 239 242-2005,  judy@capecoralwaterfront.net

BUT WAIT!  Inventory is being snapped up so quickly that, if you have a nice house to sell, it is a good time to SELL as well.  Buyer demand is pushing up house prices and with under a 3 month inventory to sell it is now become a SELLER’s market.  If you have been waiting to sell, now may be the time!

Judy Ramage, Broker Associate ReMax Realty Team 239 242-2005