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Tag: Manatee County real estate

Castles in the Sand

The fun and not-so-fun of selling a home

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Last week we talked about the fun and not-so-much fun of buying a home. This week we’ll talk a little about selling your home, choosing the perfect realtor and not necessarily one you’re related to. But before we do that, let’s review the June and July Manatee County sales statistics as reported by the Realtor Association of Sarasota and Manatee.

In June, Manatee County closed 2.2% fewer homes than last year, not surprising for this time of year. In spite of that the median sale price, half above and half below, increased by 5% from last year to $315,000. The average sale price was $397,987, up 8.8%, and the month’s supply of properties is down to 3.6 months.

June’s condo sales increased for the number of sales by 6.1%, the median sale price was $210,000, up 14.3%, and the average sale price was $246,381, up 5.2%, all impressive numbers. The month’s supply of properties was 4.2%.

July single-family sales were down slightly by 1.8%, but the median sale price broke a record at $325,000 up 5% from last year. This is the highest median price since the housing crisis more than a decade ago and near historic levels. The average single-family home price was $391,049, up 2%, and the month’s supply of properties was down to 3.4%.

Condo sales were up by 8.7% with a median sale price of $191,000, down 4.1%. The average sale price for condos was $216,523, down 6.6% from last year and the month’s supply of properties was 3.7%.

Do these numbers give you incentive to find that perfect realtor and consider selling? Maybe, but remember statistics are only a snapshot in time and, although our sales and appreciation rates continue to go up every month, it could change in a heartbeat.

But just in case you’re ready to cash in, here are a few tips for choosing a realtor:

Although there are many questions you should ask a real estate professional before you turn over what may be your biggest asset to them, the two that are most important to me are how long have you been in residential real estate sales and what is your specific marketing plan?

Much of real estate experience is an on-the-job learning experience but choosing an agent who has accumulated a few designations or certifications shows a commitment to his/her profession. Certainly, you should ask if real estate sales are their full-time job. There are sales agents who get into the field thinking it’s a part-time job they can fit around their children’s school schedule. Trust me you don’t want this person.

As far as a marketing plan, the agent should be prepared to show you a written plan involving print advertising, open houses and digital participation. They may also include a pricing schedule suggesting a step-down pricing recommendation for 30, 60 or 90 days in the event offers are not coming in. As part of this plan, your agent should advise how frequently he/she will be in touch with you regarding showings and feedback.

It is also important for you to know how long homes in your area are taking to sell and the variation between the listing and final sales prices. I frequently note these statistics in my monthly updates for Manatee County because they are so important to the overall picture of the market.

Finally, giving your listing to a relative may look appealing since you already have a relationship and he/she may offer to reduce commission for you. However, it takes away the business aspect of the transaction and gets into the emotional aspect. My advice is don’t do it.

I’m looking forward to receiving the August Manatee County real estate numbers and hope you have a fun selling experience with a qualified broker.

More Castles in the Sand:

The fun and not-so-fun of buying a home

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Uncovering a home’s defects

Castles in the Sand

The challenges of inheriting a house

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

No one wants to see a loved one pass away, but it’s inevitable that we all will have that experience and along with the grief comes the distribution of personal items and property. As emotional as sifting through your family’s papers and clothing is, the real challenge at this time of your life will be selling their property.

The important thing to be clarified before death is if there is a will or trust in place. Dying without a will causes the estate to default to the statutes of the state to determine who the legal heirs are. Needless to say, that will be a time-consuming and possibly costly process involving probate. Even a will needs to go through a probate process, however, living trusts will avoid probate. These are all legal issues which will need a legal opinion.

If there is a home to be sold and there is a legal will or trust, that responsibility will fall to the executor of the estate. The executor has the power to make all decisions but should certainly confer with all other beneficiaries to the sale of the house.

As in all property sales, decisions need to be made starting with a reasonable selling price. More than one estimate of value should be obtained from real estate professionals and a licensed appraiser should also be considered, especially if there are multiple heirs, to avoid any appearance of impropriety.

Whoever is handling the sale of the property should be prepared to spend some money before the home is sold. Property taxes, utility bills, lawn maintenance and unforeseen repairs all have to be considered prior to sale.

In addition, the property needs to be cleaned out of personal items and, based on the recommendation of a real estate professional, the furniture removed. There are companies that take care of this and any furniture not sold at an estate sale is removed by the estate person for a fee. However, the family will still need to decide which items will go into the sale, which will be passed along to other family members and which will get destroyed – not an easy process.

Then, of course, as in any property sale, decide whether renovations and/or cosmetic fixes should be made. Most professionals will tell you that this is not the time for major renovations. If necessary, cosmetic fixes would be a better choice. Cleaning, painting, yard and garage clean up is probably the most practical and least expensive way to go. Here again, the advice of a competent and experienced real estate professional is essential to understanding the local market.

Heirs who are in a tight financial position and need to sell quickly could consider one of the quick-sale companies as long as they are willing to take a discounted price. The heir’s tax consequences should also be considered before any money is spent and sale offers are considered, especially if the property has been in the deceased’s name for a long time.

Here in Florida it’s very common for parents to pass away and leave property in their estate to be sold by their heirs. This is a little more of a problem if the beneficiaries are out of state, but again because it’s common in Florida, there are several companies to assist heirs in the disposal of personal property and furniture.

Selling a family home is always emotional and more so on the heels of a loved one’s death. Ask for help during this time; it’s out there.

More Castles in the Sand:

Uncovering a home’s defects

How to determine the truth about home flooding

It’s all about the kitchen

Castles in the Sand

How to determine the truth about home flooding

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Home inspections and seller property disclosures are an intricate part of home buying. You would think a seller’s disclosure is pretty clear cut, but it’s far from that, especially when it comes to flooding.

Flooding is the one thing potential property owners on bodies of water want to know the most about but, in fact, know the least. In Florida, there is a seller’s property disclosure form provided by the Florida Realtors Association. Although this form is provided to sellers when they list their property for sale with a real estate professional in Florida, they have no legal obligation to fill it out and sign it. Sellers and their realtors do, however, have a legal obligation to disclose to the buyer all facts that can materially affect the value of the property. It just doesn’t have to be in writing.

When it comes to the disclosure on previous or present flooding, sellers are only required to disclose what they know. If the house was flooded five years before they purchased and they were not aware of it, there’s nothing to pass on to a new buyer. Essentially sellers are required to disclose material defects to buyers that they know about.

Since most home inspectors cannot determine if a home has been flooded in the past, where do buyers go for a history of the property’s flooding? It’s a good question and one that U.S. lawmakers are just starting to look at. The House Financial Services Committee advanced legislation in June that would require the Federal Emergency Management Agency (FEMA) to share information about a property’s flood history. This would be a least a step in the right direction for buyers, but when and how this information is provided could be a long way off.

FEMA has recently released data on all 2.4 million flood damage claims processed since the 1970s. Unfortunately, it’s not a practical reference for individuals because of size and lack of address referencing. FEMA does update federal flood zone maps but again that is geared more for insurance companies and gives no information specific to individual properties.

There are some organizations that are trying to improve flood disclosure information. One of them is First Street which collaborates with Columbia University and the Massachusetts Institute of Technology among others. It is building a comprehensive database of homes that have flooded or are at risk of future flooding. It uses satellite imagery, high watermark data and other information, including FEMA data on flood claims, to determine if homes may have been flooded.

This information is not new; it has been available to large real estate owners but was financially out of reach for individuals. First Street claims it will launch its database within a year and it will be free for individuals to access. Sounds great, but there is a big margin of error within some of this information. It goes without saying that the impact on property values could be enormous. Will buyers’ willingness to purchase a property be influenced based on this new, possibly subjective information?

Next week we’ll talk about all the other disclosure requirements in Florida and there are plenty. Purchasing property on or near bodies of water, oceans, rivers and lakes are all susceptible to flooding and are inherently risky. There are no guarantees in life and certainly none in homeownership. Do your due diligence with the information available and hope for the best. Look on the bright side, at least we don’t live with the threat of earthquakes.

More Castles in the Sand:

It’s all about the kitchen

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Castles in the Sand

It’s all about the kitchen

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

You may not want to do a kitchen renovation in August, but August is the perfect time to start planning one. Sitting on the patio with your iPad or on the beach with a home decorating magazine is an easy way to start planning that new kitchen. Add a cool coconut drink and you’ll soon forget that it’s 95 degrees.

Kitchen trends change almost as fast as fashion trends. What’s in now will undoubtedly be out in three years. It’s impossible to keep up and most of us don’t even try, but if you’re one of those who must have the latest, here’s where you should be looking:

In spite of the fact that we’re told white kitchen cabinets are out, according to Houzz, it’s still the most popular color at 43% of remodels. Second place is wood cabinets at 25%, followed by gray at 11%.

The trendy colors are now bold – deep blue, red and, ready for this, black. Now over 30 years ago when my sister-in-law was choosing kitchen cabinets for their new home, she picked black. She was always a trendy gal, but at the time I had never seen black kitchen cabinets before and was definitely taken aback. Little did I know she was decades ahead of her time. Today’s black is designed to provide a quiet soulful balance in the kitchen, combining cabinets, matte black appliances and black backsplashes.

Completely the opposite of black, a color that is also new and trending is mint green. Certainly, in my opinion, mint green is a better choice for beach living if you must give up white. Finally, two-tone cabinets, different color uppers and lowers are so in. I expect they’ll be out soon. Nevertheless it is a nice look. If you can’t bear to give up your white cabinets, you can make them trendy with dark lower cabinets.

As far as countertops, stone is and probably always will be the choice of most homeowners. Granite lost its first-place position a long time ago, replaced by quartz, but the trend now is to use concrete counters and natural stone. Backsplashes are also being invaded by natural stone with edges. I wonder how you keep that clean, with it installed right up to the ceiling?

The most popular cabinet style, according to Houzz, is holding with the ubiquitous shaker cabinets chosen by 57% of homeowners. Open shelving instead of all upper cabinets are also trending. They create a more uncluttered feeling, especially with an interesting backsplash. But if you do have upper cabinets, they must go to the ceiling.

And high tech is all over new kitchens – appliances that talk to you and your iPhone and charging stations are a must just as are hoodless ventilation systems. Thankfully rose color hardware and appliances are gone after their 15 minutes of fame.

So is doing an expensive kitchen renovation worth it in dollars? Maybe or maybe not, depending on what you do. Eighty percent of buyers place a nice kitchen in their list of the top three most important spaces in a home. Nationally, the average cost of a kitchen renovation is $35,000 but you could spend three times that.

Most kitchen renovations do add value to a home but most will also not be fully reimbursed in actual dollars. The benefit of a nice kitchen, however, will be in reduced selling time, which is generally reflected in actual dollar savings. Don’t forget, if you’re renovating before putting your home on the market, minor renovations can make a huge difference in appearance and get you the bigger bang for your buck.

It’s easy to dream about your dream kitchen during a hazy summer afternoon, just don’t let the heat and coconut drink give you delusions of grandeur, especially if you’re thinking black cabinets.

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Calming waters

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Castles in the Sand

Calming waters

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

It’s the end of July, and most of the country is hot, really hot. But if you live near the water as we do, it doesn’t seem so bad. Imagine living in a landlocked state and it’s 95 degrees day after day. Aside from keeping cool, living near the water has many other benefits, according to a book called “Blue Mind.”

Sitting on a beach has always been one of my favorite things to do and I have been fortunate enough my entire life to have quick access to wonderful beaches. It gives me a sense of well being and just staring at the water puts me in a mildly meditative state, a blue mind.

This is exactly what Wallace Nichols a marine biologist talks about in his book “Blue Mind.” He says that merely being close to a body of water, sea, river, ocean or lake can promote mental health and happiness. Further, water lowers stress and anxiety, lowers heart and breathing rate and improves creativity. Sometimes even dreaming or daydreaming about a beautiful beach and crystal water can calm down anxiety.

Nichols’s theory would explain the popularity of Anna Maria Island and the accompanying increase in real estate values. Coastal Living Magazine had a recent list of the happiest seaside towns in the country. Anna Maria came in fifth and the only picture the magazine used in their piece was one of Anna Maria’s iconic cottages on Pine Avenue.

Now it’s time to take a look at the June Manatee County sales statistics reported by the Realtor Association of Sarasota and Manatee:

Single-family homes closed 2.2% fewer properties, however, the median sale price was up 5% to $315,000 and the average sale price was $397,987, which is 8.8% higher than last June. The median percentage of original list price to the final sale price was 96%, about the same as last year. The median time to sell was 102 days this June. Last year it was 90 days and the month’s supply of properties is 3.6 months compared to 4.1 last June.

Condos closed 12.2% fewer properties this June compared to last. Like single-family homes, the median sale price for condos was also up by 3.9% to $199,000. The average sale price was also up 1.6% to $236,307. The median percentage of original list price to the final sale price was 95%, up 1.3 percent from last year. The median time to sell was 101 days this year compared to 111 days last year and the month’s supply of properties is 4.1 months, the same as last June.

With the exception of fewer closings, June’s numbers are all in the green for both single-family and condos. If you have a smaller supply of properties to sell, chances are you will have fewer closings – the good and bad of a great real estate market. In addition, the median percentage of listing to sale price is a good indicator of the health of the market. When you’re getting close to 100% of listing to sale, you know things are good.

This time of year, it’s not easy to find a state that is naturally cool, believe me, I’ve tried. It’s also not easy to find a place where people are not over-connected and over-stimulated, creating a red mind the opposite of a blue mind.

However, we have it right here on Anna Maria and the surrounding areas. Is it worth the extra money for a home on or near the water? Just ask anyone who has one. “Blue Mind,” a perfect name for a cottage on the beach.

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Castles in the Sand

The suburbs and the millennials

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

For several years, I wrote about how the millennials were moving into the cities. They didn’t want anything to do with the suburbs and their parents’ lifestyle. Well, in the space of two weeks I discovered that everything old is new again.

In the 1950’s families, including mine, were moving from the city to the suburbs, buying up new homes in what were once potato fields and family farms. This migration from the cities to the suburbs happened because of the demand for housing after World War II when the veterans could finally settle down and start their families.

When the grandchildren of those families grew up, they said, “No way,” and vowed not to return to the mundane lifestyle of backyard barbeques and Little League. But don’t ever say never since the millennials, many of whom are in their late 30s, are coming back with families in tow, only this time instead of moving to the suburbs outside of major Northern cities, they’re coming south. This reversal has a lot to do with the mobility of jobs and the growth of the South, which is benefitting from the real estate slow down and taxes of the Northeast.

Recently, a very extensive piece in the Wall Street Journal studied the reversal from city to suburban life. It reported that the growth rates of the suburbs are far outpacing metropolitan areas and the South is winning the race. This supports what I wrote about last week regarding investors buying up first-time buyer properties, hurting millennials who suddenly want to buy houses and raise families.

Some of the hot Sun Belt areas with good job opportunities that are benefitting from this influx of young families are Frisco, Texas, Nolensville, Tennessee, Scottsdale, Georgia and our very own Lakewood Ranch.

As fate will have it, the same day I read the story about the city to suburban reversal there was a report in the Bradenton Herald about 3,000 new homes that will be built in Lakewood Ranch. After a little research, I discovered a couple of interesting things about Lakewood Ranch that we who live surrounded by water probably haven’t paid attention to.

First of all, 74 percent of Lakewood Ranch residents are either between the ages of 25 – 44 or over 65. I also read that Massachusetts General Hospital is opening a Brain Health Initiative that will be based in Lakewood Ranch, kind of an achievement for the Bradenton area. Also, the median age in Lakewood Ranch is 49.4 compared to Anna Maria Island’s 64.3. There are not too many millennials with families moving here. Finally, Lakewood Ranch is 31,000 acres and 29 square miles with a population of over 11,000.

The reason I’m telling you this is two-fold. First of all, to keep everyone aware of changes in real estate trends both locally and nationally and second to help us sun and sand worshippers appreciate what’s going on east of our shoreline. We’re all part of the same region, so what happens in Lakewood Ranch can have a serious impact on us – traffic, parking, success of restaurants and shops just to name a few. The millennials may prefer to live in Lakewood Ranch, but for them visiting Anna Maria Island is one of the reasons they came here.

Well, once again, millennials are picking up where baby boomers left off. Now it’s their turn to influence all aspects of life in the country. Everything old is new again.

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Are you as smart as a private equity firm?

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

The phrase, “follow the money,” goes back to the Watergate era as a method to shed light on corrupt activities by looking at money transfers. But following the money does not always lead to corruption. It could lead to some really good business advice.

Last week we reported the May real estate sales statistics in both Manatee and Sarasota counties being up substantially to the point of registering the highest numbers post-recession. Manatee County’s median single-family home sale prices were up 4.9% from last year continuing the $300,000 or above median sales price for most of the past year and a half. How much of this increase in selling price is fueled by investors, we have no sure way of knowing. What we do know is investors are totally into the U.S. real estate market.

Based on data released by CoreLogic, Inc., last month more than 11% of U.S. home purchases in 2018 were made by investors. This is a record high of investors, the highest recorded and nearly twice the levels before the 2008 housing crash. Investors are purchasing to flip properties or turn them into single-family rentals. The investor profile is everything from big private-equity firms to real estate speculators and individuals who want to get in on the action.

Investors swooped into the housing market in 2011 and 2012, buying with all cash when prices were low and mortgage credit was difficult to get for the average buyer. Economists gave them credit for helping to stabilize the market but expected the investors to slow down when prices started climbing after everything returned to normal. However, that hasn’t happened, partly because of strong rental demand.

Unfortunately, much of the rental demand is coming from first-time buyers, specifically millennials who are competing with investors that are buying up the low end of the real estate market with all cash transactions. According to the CoreLogic survey, investors purchased one in five homes in the bottom third price range in 2018, exactly where first-time buyers generally start at.

Complicating things further for first-time buyers is technology. The internet has made it easier for smaller investors and foreign buyers to purchase properties sight unseen. A few weeks ago, I talked about iBuyer companies, such as Opendoor, Zillow and Redfin that offer cash to homeowners who want a quick deal, avoiding the stress of putting their homes on the market.

These properties are either flipped or sold to investors for potential rentals. CoreLogic further reported that investors bought about half of the starter homes in Philadelphia last year and about 40% of the lower end of the market in Detroit. Again, first-time buyers are being run over by cash investors and technology.

Investors are also banking on renting vs. buying being a double-edged sword. Owning their home has always been the goal of Americans and many feel that renting is inherently wrong and a waste of money. Now, however, first-time buyers are rethinking that calculation. Mobility for job advancement is important to millennials who understand that about five years is the break-even point between owning and renting and may opt to rent until their careers are stabilized.

Renting instead of buying is a conversation that doesn’t make me happy. I still believe that owning your own home has more benefits than renting and should not be entirely a business decision. My opinion – follow the money straight to your new home.

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Real independence

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

July 4 is Independence Day, representing this country’s desire to be independent of not only the British but also to be self-sufficient, able to make to our own decisions and to live in freedom. We’re a lucky people living in the United States and we’re also lucky to be living in Florida, especially if you own property here.

Manatee County real estate values and activity continue to grow practically every month, and May was no exception. These are the May sales statistics reported by the Realtor Association of Sarasota and Manatee, which reflect the multiple listing services recorded sales numbers.

Single-family home sales in May compared to May of last year increased by 13.3%. The median sale price, half above and half below, increased by 4.9% to $319,995. This is the highest median price in 10 years. In addition, since December of 2017, the median sale price for single-family sales in Manatee County has been at or above $300,000 for 12 of those months.

The average sale price for single-family homes compared to May of last year was $388,672, down by 4%. The median time to sell was 97 days, down 1%, and the month’s supply of properties was down 11.6% to 3.8 months. As a side note for single-family properties, cash sales were up 10.8%.

Sarasota County’s numbers are also good for single-family sales. The median sale price for May compared to May of last year was $305,305, up 8.7%, and the average was $411,199, up 8%.

Condo sales in Manatee County were up 6.1% and the median sale price was up 14.3% to $210,000 compared to last May. The average for May was up 5.2% to $246,381, the median time to sell was up 15.1% to 107 days and the month’s supply was down 6.7% to 4.2 months. By comparison, Sarasota’s median condo sale price was $238,000, up 1.4%, and the average sale price was up 5.5% to $361,732.

These are fabulous numbers for both Manatee County and our close neighbor Sarasota County. It was reported that these are the highest post-recession sales numbers for single-family properties for both counties. It’s hard to imagine things getting much better, but it is expected they will, based on the stable interest rates below 4% and the fact that the Federal Reserve has indicated it could cut interest rates further in the months ahead.

The state of Florida is also experiencing upward mobility in the sales of both single-family homes and condo sales. Statewide in May compared to last May there were 9.6% more closed single-family homes with a median sale price of $266,000, up 4.3%. Condo sales in the state in May closed 1.6% more properties with a median sale price of $195,000 up 3.7%.

Nationally, existing single-family home sales increased by 2.5% in May as reported by the National Association of Realtors. It also points to falling mortgage interest rates being beneficial to the housing market and is optimistic that the spring selling season will give the somewhat sluggish national housing market a well-needed push.

The national median sale price for single-family homes was $277,700, up 4.8% for last year and the strongest monthly pace of growth since last August. The National Association of Realtors also reported that there have been 87 straight months of year-over-year gains in the national housing market.

So, enjoy your holiday and the good news about the real estate market. We are indeed lucky in so many ways. Happy Independence Day.

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Written by Louise Bolger on . Posted in Business, Castles in the Sand.

I love learning new words, and I love applying those new words to anything in real estate. My new word is chimera, which is from Greek mythology and is a fire-breathing female monster. Now before you start with the female jokes, chimera is also a thing that is hoped or wished for but, in fact, is illusory or impossible to achieve.

There was a time in this country when mortgages were not easy to come by. Typically, if you wanted a mortgage to finance a home, they were short term loans with very large down payments, balloon payments and floating rates. The creation of the 30-year fixed-rate mortgage came about after the Great Depression and was part of The New Deal which established the Federal Housing Administration (FHA), setting up 15- and 30-year mortgages. Subsequent to that in 1938, Fannie Mae was launched as a way to free up mortgage money making it more available to Americans.

Fannie Mae and then Freddie Mac were created to encourage banks to make more home loans by backing the loans with federal guarantees, thus removing almost all of the home lending risk. These mortgages were then packaged into securities and sold to investors.

This was a great system until it wasn’t. A major part of why the financial crisis happened is because non-conforming loans were given to buyers who were essentially not qualified by lending institutions that were not verifying their ability to repay the loan. All of these subprime mortgages were sold as securities to investors who knew that Freddie and Fannie were assuming the risk backed by the federal government.

When the house of cards finally fell down, Fannie and Freddie were put under government conservatorship in 2008, fundamentally using your tax dollars to bail them out. So here we are now with about half of the home loans today still being backed by Fannie and Freddie.

There’s no question that these government-backed agencies have done their part in creating the American lifestyle and dream of home ownership, but is it time for an overhaul of the system? In favor of keeping the status quo, lawmakers point out that that government has a responsibility to keep housing affordable for both individuals’ ability to build wealth and allowing businesses that depend on homeownership to thrive. Also, they point out that banks don’t want to keep loans on their books and, if Fannie and Freddie are dismantled, banks would rethink making loans if the economy starts to slow down drying up available mortgage funds.

On the other hand, some say the government shouldn’t assume the risk associated with home ownership and more competition in the form of private equity would be a better mix. No one wants a replay of 2008.

Over the last 10 years, there have been innumerable arguments between lawmakers and government officials about how to proceed going forward and how big Fannie and Freddie should be allowed to become. Some say part of their business should be returned to private institutions, and some say they should not exist at all. None of this will be resolved anytime soon.

However, if your chimera is owning your home, it’s actually a good time to buy. Interest rates have dropped below 4 percent for the first time since early last year, and the Federal Reserve is holding steady with the prime rate for now.

Whatever happens between the federal government and Fannie Mae and Freddie Mac isn’t your problem right now; embrace the illusion and buy a house.

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Castles in the Sand

Real estate selling for the smartphone generation

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

If your smartphone has become an extension of one hand and the TV remote an extension of the other, then iBuying may be the next logical step in selling your home.

There have always been people who need to sell their homes quickly because of a lost job, a sudden move or personal tragedy. Usually, selling fast comes at a price, but Zillow and other online tech companies think they can efficiently predict the value of a home, make you an offer and get you moving.

Last year, Zillow moved into home flipping, and it now has nine regions in play and expects to be in 20 markets by early next year. Interested homeowners complete a questionnaire on Zillow’s website and they receive an initial offer within 48 hours and a final one after an inspection. There is a service fee of about seven percent of the purchase price based on needed repairs. If accepted, Zillow closes the transaction within 90 days and then attempts to resell the house.

Sounds easy, right? Well, it is in the sense that you don’t have to pick up the kids’ socks and put away the breakfast dishes to get ready for a showing. You also may not have to make maintenance repairs or updating if you’re willing to accept Zillow’s offer reflecting these changes.

This can cut both ways. Yes, you don’t have to come up with the money to do the repairs and you avoid the inconvenience, but you may give up money in the long run. Most buyers like properties that are move-in ready and don’t want a renovation project. It’s easier for them to pay more and build the work that’s already done into the mortgage than close at a lower price and come up with the money to renovate. Zillow says let that be our problem, here’s your money, goodbye.

Zillow and other online companies are primarily working in areas that are homogeneous, consistent neighborhoods where many of the homes are the same and value is quick and easy to determine. Arizona and Florida are prime areas for iBuyer programs where many of the homes are in subdivisions with identical or similar homes.

However, their goal is to move into more diverse and more expensive areas in the Northeast. They’re throwing the dice and hoping that homeowners are willing to pay higher fees for a convenient and speedy transaction. Higher priced properties tend to take a longer time to sell, costing homeowners more in carrying charges and potential repairs, especially if another property has already been purchased or is about to close.

Zillow admits its margins are “razor thin,” but is moving forward quickly. In 2018 Zillow bought less than 700 homes, but it expects to expand that to 5,000 homes per month in three to five years. The business model is to turn the property around in 90 days and remove the emotional aspect of the sale, which frequently slows down the process.

Naturally, not being part of the smartphone generation, I’m a little worried. Worried about these companies being overextended and left with a bunch of houses not selling and flooding the market. Sound familiar? On the other hand, the generation that embraced Uber may be ready for the click and swipe of selling their home.

Frankly, I kind of like the emotional aspect of selling a home you’ve lived in for many years, raised a family in and lovingly took care of. Recently my nephew and his wife purchased their first home, over full ask and with other buyers breathing down their necks. What got them the house was a personal letter to the owner with their recent wedding picture enclosed. That was the couple he wanted his beloved house to go to. I’ll take emotion any day.

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Falling in love with a second home

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Last week we had a conversation about financing second homes and some updated government regulations about renting. We even touched on the pending Florida legislation regarding short-term vacation rentals, but this week we’re going to talk about the practicality and affordability of second homes and falling in love.

Vacation homes are the ultimate discretionary purchase just above recreational boats. The one thing both of these big-ticket items have in common is the emotional aspect that manifests itself by the warm tingle that overwhelms you when you set eyes on the object of your affection. But be careful, it’s dangerous to fall in love so quickly and requires a great deal of vetting.

A vacation home should make you feel like you’re on vacation when you walk in the front door. You don’t want to step in and notice the peeling paint, mold or the ancient appliances. You also don’t want something too big or high maintenance that it infringes on what should be a relaxing time. Technology will make some of this easier to manage as well as making your property more secure when you’re not there. You can control the heating and cooling, unlock the doors should a contractor need to get in and set up cameras to see if something looks not quite right.

That said, if you’re finding your vacation home overwhelming then your future buyer will feel the same way. Vacation homes live by an entirely different set of criteria than your full-time home. The location should be the prime motivator in making a second home decision and worry more about views, beach access and walkability than the quality of schools. According to the National Association of Realtors, the most popular vacation home locations are resort areas and beach locations which account for 66 percent of the market.

If you’re considering purchasing a vacation home with a partner or partners here are a few points to consider. What is each partner’s usage schedule? Unless you are really cozy with your partners, you need to carve out some private time for you and your family. Also, are friends or family of one the partners always welcome even if the owner is not with them? Should the property be rented part of the year to cover expenses and how will the maintenance costs be managed? And who gets the final say on picking upgrades like paint color, furniture or air conditioner and appliance replacement?

And the biggest consideration is what if one of the partners wants out for personal or financial reasons? An escape hatch needs to be developed and agreed on by all partners before purchasing. Some of the things to address are the timeframe, the minimum number of years to own and a buyout arrangement or selling the property.

Finally, many Florida second homeowners decide to convert their second home to their full-time residence for tax purposes. This option is becoming more and more popular as taxes in northern states continue to go up. Keep in mind that the state of Florida has a very advanced way of keeping track of how long Florida residents spend in another home they own, so keep good records since the burden of proof will be on you.

Pretty soon we may all need vacation homes to relax since I recently read that 6,000 new homes will be built on the north side of Manatee County. Our quiet little corner of the world is no more, but at least we all fell in love at the right time.

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Floods, saltwater and freshwater

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Castles in the Sand

Floods, saltwater and freshwater

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

The poet W. H. Auden said, “Thousands have lived without love, not one without water.” Surely, he meant both freshwater and the ocean water since both feed the body and soul, but both can have their challenges and both are subject to flooding.

Let’s start with the waters that surround our Island. This is the saltwater that feeds our souls. Those of us who choose to live on the Island or near the surrounding waters would never think of living in a landlocked state, it’s just who we are. But we do pay a price for it and that price may be increasing soon.

The Federal Emergency Management Agency (FEMA) has published new Flood Insurance Rate Maps which will change the base flood elevation for many Manatee County property owners. The last time these maps were updated were 30 to 40 years ago and since then there has been much new technology to better analyze data. In addition, the new maps will consider wave action as well as the height of flood waters.

The result of this will be more accurate maps and could result in flood zone ratings going up for some properties, down for others or no change at all. You can determine how your property is affected by checking the Manatee County website, www.manatee.org and keyword search “flood zone.”

The flood zones are assigned a letter and are also color-coded on the maps. Here is a quick review: A (blue), AE (lavender), Floodway (pink), VE (green), X (shaded) and X (no color). A, AE, Floodway and VE are all high-risk for flood and typically require flood insurance. X (shaded) is moderate risk and does not typically require flood insurance and X (no color) is low risk and does not typically require flood insurance.

As most homeowners who have a federally backed mortgage know, you are required to have flood insurance as one of the terms of the mortgage. However, all homeowners in flood zone areas should carry flood insurance. Also, the Manatee County website has lots of good information specific to your property so it’s worth taking a look at for a variety of reasons, including flood zone information.

But what about the other water essential to our lives, freshwater. It may come as a surprise that flooding in the home is the number one risk that everyday consumers make insurance claims on. One in 50 homeowners filed a water damage claim each year between 2013 and 2017.

Part of the reason there are so many more claims compared to previous years is the increase of water-using appliances like wet bars and water filtration systems as well as the popularity of second story laundry rooms. Old pipes in aging homes, worn out valves and worn out hoses contribute to interior floods.

Some of this can be mitigated by inspecting the caulking around tubs and shower stalls, watching for drips under sinks in both the kitchen and bathrooms, and changing hoses to dishwashers, washing machines and ice makers. Condo living is especially vulnerable to leaks from upper units and residents of upper units should be especially vigilant. There is some technology available containing water detecting sensors but at this stage, they are not 100 percent dependable.

Water is life but too much of it can be deadly and inconvenient. So, check the new floods zone maps and check the old hoses, then relax and enjoy the view.

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Taxes come and gone

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

April 15th has finally passed. Every year we hold our breath until this day is in our rearview mirror, especially this year. Let’s see how some of the changes impacted property owners and take a glance at the future.

Mortgage interest and state and local tax deductions have been the most controversial changes in the new tax code. The capping of state and local tax deductions has been a blow to states where these taxes are high and where homeowners own more than one property, driving families to make tough decisions about where to live.

However, of the two, the mortgage interest deduction is the one that could change the face of real estate. The eligible deductible mortgage interest was capped at real estate sales for $750,000 or less, this was reduced from $1 million. But this only tells part of the story; the real change is the doubling of the standard tax deduction to $12,000 for single people and $24,000 for married couples, making the mortgage interest deduction for many homeowners irrelevant.

So far less than half as many American homeowners are claiming the mortgage interest deduction for 2018 taxes than last year. When all tax filings are completed, it is estimated that the number of taxpayers who take the mortgage interest deduction will fall from 20 percent of returns in 2017 to 8 percent of returns in 2018.

For many economists, this is long overdue and could be the first nail in the coffin of the mortgage interest deduction being suspended permanently. The mortgage interest deduction has been in effect since 1913 when the income tax was created, and it was always assumed that the mortgage interest deduction encouraged homeownership, however, study after study does not agree with this. Our close allies, Canada, the United Kingdom and Australia have no mortgage deductions and their homeownership rates are slightly higher than in the United States. Further, this subsidy reduced federal revenues by about $60 billion a year now down to around $30 billion. In addition, the mortgage interest deduction encourages homeowners to purchase larger homes with larger debt, increasing the likelihood of default and many believe has an environmental impact.

And as if New York City doesn’t have enough problems with a soft real estate market and high taxes, now the tax gun is pointed at the ultra-rich. There is already a “mansion tax” in effect in New York of 1 percent of purchased properties valued above $1 million, which doesn’t buy you much in New York City. Now the city wants to impose an additional tax starting at 0.5 percent a year on property valued over $5 million graduating up to 4 percent on property value that exceeds $25 million. How would you like to be a high-end real estate broker in New York if that happens?

As a final note on taxes, now that 2017’s tax returns are hopefully in the file cabinet, it’s probably a good time to have a chat with your accountant relative to payroll deductions. The tax overhaul did decrease weekly withholdings for most people resulting in smaller tax refunds than some people anticipated.

So, congratulations – you made it through a very hairy tax year. Now you can sit on the beach, read trashy novels and make the rounds of island restaurants. You deserve it after surviving the largest tax overhaul in a generation.

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Real estate process speeding up

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

For me, a good recipe has three main components – less than five ingredients, less than 30 minutes and less than two pots. A good real estate transaction is not so different than a good recipe; the objective is to keep it simple.

One of the most tortuous aspects of buying a home has always been the mortgage application process. First, you are asked to provide the lender with W2s, pay stubs, tax returns and possibly your blood type. Then the “loan officer” does a credit check and pulls your credit score. He/she then rolls up their sleeves and adjusts their eye visor and starts plowing through your personal data trying to find why you may not be trustworthy with their money.

The first thing they’re looking for is credit score and if your score is hovering around 600 be prepared to renew your rental lease or pay a larger down payment and/or higher interest rate. Also, your income must support the amount of mortgage you’re applying for and your general credit report must show no serious late payments and hopefully no bankruptcies.

Naturally, while this process is under scrutiny, you will experience some of the most stress you will ever have especially if you’re a first-time buyer. But there is good news which may not take away all of the steps during the process but could speed up the process considerably.

Mortgage lenders are starting to outspeed themselves, that is promising quick mortgage confirmations and a more streamlined process, even offering cash bonuses if they don’t meet their target date. In 2018 it took an average of 43 days to close a home mortgage but now some lenders are doing it in 21 days or less.

One of the ways this is accomplished is of course through technology that can link banks to the loan application allowing the lender to obtain documentation and data directly. It may also be possible to have a remote closing, also speeding up the process.

In addition, with the blessing of Freddie Mac and Fannie Mae, some properties may be eligible for an “appraisal waiver,” the thought of which makes me shake in my sandals. Instead of Fannie and Freddie having more restrictions in the wake of the 2008 financial crises fueled by low down payments and many no documentation loans, the Housing Finance Reform recently issued has done the opposite, keeping the American taxpayer on the hook for loan defaults.

However, mortgage rates are approaching 4 percent which will hopefully jump-start the housing market. The average 30-year fixed rate mortgage during the first week of April fell to 4.06 percent, the lowest since January of 2018. Freddie Mac said the rates have been dropping quickly as much as a quarter point in one week, the biggest drop in over a decade. Naturally, mortgage applications increased by 8.9 percent in early April.

I’m not sure how I feel about the link to your bank but other than that I’m all for a speedy process, which can be very important if you have an all-cash buyer who has suddenly shown interest in the home you want. So future homebuyers, as you start stepping back into the market since you can’t resist the interest rates, just remember less is more, in mortgage processing and in cooking.

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Technology can’t replace real estate brokers

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Technology has done as much to change the real estate industry as Henry Ford did to change the production of automobiles. However, where Henry Ford brought the cost of cars way down with his technology, the real estate industry hasn’t adjusted their fees. But before every real estate broker within 50 miles of Anna Maria Island starts calling me, let me give you the pros and cons of this debate.

Yes, it’s true that house hunters can go online and see virtually every house on the market in their chosen area. It’s also true that buyers frequently call brokers after they have sifted through the online housing inventory and are ready to get inside the property. And yes, it’s also true that brokers are saving a lot on gasoline by not driving customers around for days on end as we all did years ago. But none of this tells the real story.

Let’s start with selling your home and determining a listing price. It’s pretty easy to gather a bunch of comparable properties that have sold in your area from realtor websites and county records, but are they really comparable? You haven’t been inside these properties, so you don’t really know how they compare. Active local brokers have been in a lot of closed properties and they have the ability to analyze selling prices and recommend where your house should be listed. If your house sells fast because it was priced correctly, you’ll quickly forget about the real estate commission.

How about showing your home. Do you want to field calls and schedule appointments with buyers who may not be qualified financially or who may just be kicking tires? And don’t dismiss the importance of negotiating once a buyer comes forward with an offer. No matter how successful you are in your business life, negotiating real estate offers are a different animal, the element of emotions when you’re negotiating on your own home can’t be overstated.

Finally, here in Florida, it’s not uncommon to be selling to an out of state or out of country buyer. Navigating the details of these transactions can be tricky unless you have someone who has been through it. Not to mention selling a property from out of state that needs to be cleaned out and ready for sale, another job that Florida brokers are set up to do.

What about buyers, why do they need to call a broker after they’ve done all the work on their smartphones. If you’re sitting in New Jersey in February looking at beach properties on Anna Maria Island they all look great. You really need the advice of a local broker to educate you especially in a specialized area like Anna Maria Island.

Are you relocating permanently and need advice about schools, are you buying a second home and need advice about rental possibilities, or do you simply want to know the quality of the restaurants in the area? All of this, the really important and the really not so important is where someone with years of local knowledge becomes crucial.

I love the real estate technology available to everyone today, I love that you can see every property that’s on the MLS, but this technology has been around for about 10 years and real estate professionals are still going strong. There must be some reason, maybe the brokers just decided to get out of their cars and realigned their priorities. Just like Henry Ford, technology is meant to enhance not replace.

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