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Castles in the Sand

Good shoes

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

Back in the days when I worked in New York City, I wore real shoes; not the sandals and flip flops that pass as footwear in Florida, but good shoes that matched my outfits and cost a tidy sum. I always felt that if you wore good shoes it didn’t matter what the rest of your outfit looked like and how much money it cost or didn’t cost – it was all about the shoes setting off everything else.

Well, the same can be said about homes. We all want our homes to show their best assets when we put them on the market and one of the very best assets that you can show off is the front lawn. First impressions do count and before a potential buyer gets out of the car, they will notice the front of the house including the landscaping, the front door and the bike with training wheels your 5-year-old left smack dab in the middle of your freshly mowed lawn. A lawn can tell you a lot about the owners of the home and their attention to the maintenance and details of the property.

The following will tell you a lot about the Manatee real estate market for October as reported by the Realtor Association of Sarasota and Manatee: Single-family homes closed were down 12.3% because of a lack of inventory. The median single-family home sold for $425,000, up 18.1% and the average sold for $565,362, up 17.5%. The median time to contract was six days and the month’s supply of properties is 0.8 months.

Condo sales were also down by 11.6% because of low inventory. The median sale price was $278,000, up 9%, and the average sale price was $330,662, up 12.2%. The median time to contract was seven days and the month’s supply of available properties was 0.6 months.

Cash sales for both single-family homes and condos remain high, with an increase of 8.5% for single-family and 10.7% for condos.

We’re kind of getting used to these great reports every month and so is the rest of the country. As reported by the National Association of Realtors, home prices climbed across the United States in the third quarter. The median sales price for single-family existing homes was higher in the quarter compared with a year before. Nationwide, the median single-family existing-home sales price rose 16% in the third quarter to $363,700 from a year earlier.

Realtor.com states that the geographic shifts that have been happening as a result of people working from home because of COVID-19 still hasn’t settled down. They feel we’re still in the early stages of these shifts and won’t know for a while where it will all end.

The Bradenton Herald reported recently that the population of Manatee County has increased more than 70,000 since the last census in 2010. I’m guessing that’s a lagging number and the actual increase in population was quite a bit more.

The chief economist for the National Association of Realtors, Lawrence Yun, says the speed of home price increases should be reduced as more homes hit the market early next year and mortgage rates continue to climb.

That might be the case nationwide, but Florida real estate is still on fire, and we’re not done yet. The President of the Realtor Association of Sarasota and Manatee said this about the October statistics: “Make no mistake – prices are going to rise in 2022, and most likely by a lot. There simply aren’t enough homes coming to market to offset the enormous demand.”

Meanwhile, don’t forget to keep your landscaping in tip-top shape; you don’t want to miss out on these fabulous selling prices. After all, your front lawn is the shoes that make the outfit.

Castles in the Sand

Global property boom

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

The old adage that all real estate is local for the most part still holds. For instance, properties on Anna Maria Island have significantly different price points than properties in other areas of Manatee County. However, there is a global reset in one area since the entire real estate market around the world after COVID-19 has experienced a property boom.

Europe, Australia, New Zealand and the Asian markets are all struggling with the affordability of home prices. In most of these areas, as well as in the United States, the home price to income ratio is at a very high level; in some regions, the highest ever recorded. Governments are at a loss as to whether stepping in will help or hinder the marketplace. In China, efforts to slow down the market have been a failure and the rest of the world has been watching.

Homeowners who purchased their properties prior to the pandemic are substantially richer than they were on closing day. And Anna Maria Island may be the perfect example of what has happened during the last two years.

For several years I did a quarterly review of properties listed and sold over $1 million in the three cities on Anna Maria and Cortez. I’ve decided to change that analysis to every six months to better give a more consistent overall picture of the market. The following statistics are covering sales from May through October of this year, closing at or above $1 million as recorded by the Manatee County Property Appraiser’s office.

The city of Anna Maria closed 56 properties at or over $1 million, averaging slightly over nine properties per month. The highest sales were $6,800,000 and $6,750,000; there were three sales over $4 million; seven sales over $3 million; 13 sales over $2 million and the balance were $1 million or over.

The combined cities of Bradenton Beach and Holmes Beach closed 97 properties at or over $1 million, averaging slightly over 16 properties per month. The highest sale was for $5,450,000; there were three sales over $4 million; five sales over $3 million; 29 sales over $2 million and the balance were $1 million or over.

Cortez closed two sales, both over $1 million.

On the market or pending as of this writing in the city of Anna Maria, there are 35 properties $1 million or over. The highest is $16,500,000; there are two over $9 million; one over $6 million; one over $5 million; one over $4 million; six over $3 million; 12 over $2 million and 11 over $1 million.

The combined cities of Bradenton Beach and Holmes Beach have 61 properties on the market or pending as of this writing. The highest are $7,995,000 and $7,957,000; one over $6 million; one over $5 million; seven over $3 million; 16 over $2 million and 34 over $1 million.

Cortez has three properties; the highest is $4,750,000, a parcel of land at $1,300,000 and new construction in the Hunters Point development for $1,000,000.

If these numbers don’t blow you away, I don’t know what will. Some economists think it’s best to leave the market alone and let it find its own way, which I agree with. Most economists think that we will not have a 2008-type housing crash that was mostly created from poor lending standards, all of which have been tightened up.

There has been some very minor slowdown in sales in the national market recently, nevertheless, prices aren’t expected to fall significantly. Have a Happy Thanksgiving; we homeowners have much to be thankful for.

Castles in the Sand

Virtual real estate

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

As the world moves closer and closer to virtual realities and artificial intelligence, no area of our lives will be unchanged. Real estate is and has always been a people-to-people business and based on Zillow’s recent experiment with automating the process, the people are winning.

Zillow created a decade-long successful business when they established an algorithm to put a value on practically any property in the country. Zillow’s Zestimates were so popular it spun off the term “Zillow Surfing” because who doesn’t want to know what their house or their relative’s house or their best friend’s house is worth? Use of their app grew 19% this year alone. With all that experience and success, what could go wrong by going into the house flipping business?

House flipping is nothing new to the real estate business. An investor buys a home, does a quick touch up and puts it back on the market at a tidy little profit. Sounds perfect for a company that already knows the value of everything; therefore, Zillow went into the iBuying business.

Based on their Zestimate, Zillow makes offers to sellers who were looking to make the process faster by eliminating the long inspection, appraisal and closing process. Typically, they were looking for properties that were relatively new, about the same size and affordable, basically homes that they could turn around quickly without doing much work.

Unfortunately for Zillow, they started their iBuying program at just the wrong time. Because of the pandemic, home prices rose sharply and properties that did need renovations sat on the market because of the dearth of contractors. Despite the buying frenzy the country was in, Zillow said it was able to convert only about 10% of serious sellers who asked for a Zillow offer –  apparently there was too much competition from non-virtual buyers.

They ended up announcing the shutdown of the iBuying division of their business in early November. It will take them a few more quarters to wrap it up at the expense of several thousand employees. Their flipping program was a big flop. This all goes back to real estate being a people-to-people business, particularly when the product you’re buying and selling is generally the most expensive thing in people’s lives.

So, is there a future for iBuying? Probably; there are still companies out there doing it. My opinion is the machines will never be good enough on their own to compensate for real people. It’s certainly possible that the future lies in a combination of virtual and real people involved. The process still needs a real estate expert to lay eyes on the property and the location looking for unusual and negative aspects that no algorithm can compensate for.

Meanwhile, there are a whole bunch of startups who will purchase a home for a buyer with all cash and wait for their mortgage to be approved for a fee. This, of course, is in response to buyers being locked out of the market by all-cash buyers. The National Association of Realtors reported that homes sold in July received an average of 4.5 offers, with all-cash buyers with no contingencies always rising to the top of the pack. A few of these companies are Flyhomes, Ribbon Homelight Inc. and Orchard.

Selling a home is not like selling shoes online. They’re hard to return if the fit isn’t right and companies who have experience in this area of marketing are finding that out. Replacing the knowledge of a hands-on real estate professional isn’t easy, no matter how good you are at writing algorithms.

Castles in the Sand

Love is blind

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

Usually, I write this column around Valentine’s Day, but this year I don’t think I can wait ‘til February. So, let’s talk about the mistakes both buyers and sellers make in an overheated real estate market and how it’s dangerous to fall in love with a home, even if it’s your own.

We’re approaching the busy selling season in Florida and everyone’s emotions are on high alert, waiting to see if sellers let loose a plethora of new listings and if buyers are still out there and not discouraged. Whatever happens, the old selling and buying rules are still in place – don’t let your emotions rule your good judgment.

A buyer will someday be a seller, so it’s important to choose a home that doesn’t have significant location flaws. The interior of a home can be fixed, renovated or enlarged, but if the home you’re settling for is near a highway, bridge or school, that can’t be changed. It’s tempting in this market to buy whatever is available and in your price range, but you still need to consider location first.

Florida has been experiencing a tremendous influx of buyers since COVID. Some are moving for our state’s attractive economic environment, some are just done with the congestion and weather in other parts of the country. Because of this a lot of new Florida residents are making emotional decisions and may someday regret it when they become sellers.

For the same reasons as above, buyers are buying homes sight unseen. The best way to tour a home is in person, or if you have a trusted friend or relative to do it for you. However, walking in the door for the first time after you’ve closed could be a shock when the kitchen cabinets are a lot more dinged than the pictures showed.

Waiving inspections even on homes that you plan on totally renovating is also a gamble. Plumbing, septic and flooding issues will still be there after you renovate the kitchen. Inspections are especially important for vacation properties, where the goal is to keep it low maintenance and enjoyable.

In this market, buyers who are priced out of single-family homes are jumping into condo ownership, many of them without realizing that properties with homeowner’s associations have restrictions you may find tough to live with. Read the condo documents, financials and rules and regulations thoroughly before signing the final contract.

In addition, the biggest mistake sellers make is assuming that a buyer will love your collection of 18th-century dolls scattered around your house and will overlook the dishes in the kitchen sink as just part of living. Wrong, a buyer’s eye will immediately go to the defects in a home and one that has too much stuff or is offensive in some way goes to the bottom of the list, even in this market.

Most sellers in this market have accumulated a lot of capital gains. Hopefully, everyone knows to keep accurate records of home improvements that can be used to offset the remaining capital gains after the IRS exemption ($250,000 for individuals, $500,000 for couples). Also consider during the negotiating process whether holding out for that extra $10,000 will actually give you money in your pocket when the capital gains are considered. It might not be worth losing the buyer for a smaller dollar amount than you thought.

The above points out just some of the ways a crazy real estate market can make you forget that you’re probably buying or selling the largest investment of your life. As in love, emotions can drive mistakes; don’t be blind to the consequences.

Castles in the Sand

Bigger waterfront homes, bigger insurance

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

Have you forgotten the collapse of the condo in Surfside, Florida yet? Those of us who live on the water in Florida may never get over it, it will just keep coming back like a bad dream. The good thing is the unfortunate collapse of the building and the death of so many residents appears to be more unique to the building’s construction and maintenance than many first thought. Nevertheless, living on barrier islands with direct ocean and Gulf exposures leaves you vulnerable in many other ways.

Last week I talked about the changes being made by the Federal Emergency Management Agency (FEMA) to the federal National Flood Insurance Program they manage. The program went into effect on Oct. 1 and will start to impact homeowners who have flood insurance through the government’s National Flood Insurance Program as their renewals come due. But there are a lot of moving parts to flood insurance, especially for high-end waterfront homes.

First of all, if you are part of FEMA’s National Flood Insurance Program, your coverage is a maximum of $250,000 in damages. FEMA does make additional funds available if a disaster is declared, which is one reason why governors of states quickly declare disasters after significant storms in order to help individual property owners as well as make states eligible for funds in a declared disaster situation.

Of course, $250,000 is not a lot of money to repair damage from a storm in a property worth over $1 million, which almost all waterfront properties in Florida are valued at. The answer is to purchase excess flood insurance coverage. As waterfront property values increase, there is a growing sector of private insurers who are filling the gap with a variety of policies. These policies could be a supplement to homeowner’s policies or could stand alone. They could be combined with the National Flood Insurance Program policy, which also offers excess flood insurance coverage. However you structure the insurance you need to meet your lender’s flood insurance requirements as well as protecting your home and investment should be reviewed with a flood insurance professional.

In addition, private flood insurance policies can go beyond what’s covered under the National Flood Insurance Program’s coverage. This might include reimbursing you for loss of income, additional living expenses coverage and even the costs of flood prevention, such as sandbags. All of the coverages available vary by the insurer, as do the rates, so purchasing excess flood insurance coverage is an important part of waterfront living and needs to be addressed with a competent insurance broker who is a specialist in flood insurance, particularly on expensive barrier islands and other waterfront regions.

Another caveat is to determine the true replacement cost for your property. Costly high-end finishes may be difficult to put a value on after a storm. Homeowners should document every detail of the home that could be in dispute if it became a total loss. Pictures and videos created before an event will become valuable when the insurance adjuster shows up.

Just to add to your stress a little more, the First Street Foundation, a nonprofit that advocates for more transparency in flood risk and climate change, predicts the following: In the next 30 years, economic damage due to changing environmental conditions is estimated to jump to 7.5 times the current average insurance payout, up from 4.5 times.

You can’t dwell on things you can’t change, like a once-in-a-lifetime building collapse, but you can prepare for your own individual circumstance. Know what you need and get the best possible advice to protect your home and family because no one wants to move inland.

Castles in the Sand

Get ready for sticker shock with flood insurance 2.0

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

It’s October, and the Federal Emergency Management Agency’s (FEMA) new program, called Risk Rating 2.0 Equity in Action, went into effect on Oct. 1. For many homeowners, this may be the annual October surprise, even though it was well-publicized by FEMA.

This overview of flood insurance premium rate increases was delayed from last year after the agency received pressure from Congress to delay the increases because of COVID-19 and other financial considerations. Remember that Florida is in the crosshairs of FEMA, which always runs a deficit, since approximately 35% of their policies are in the state of Florida.

FEMA is responsible for the National Flood Insurance Program, which is sold through individual insurance brokers. Generally, properties with mortgages – especially federally backed mortgages – are required to carry flood insurance based on the home’s flood zone.

FEMA’s new pricing methodology is intended to create a more equitable way to share the risk. Since the 1970s, a home’s flood insurance cost was based on its elevation and zone within a FEMA Flood Insurance Rate Map. FEMA says a one-size-fits-all rate policy means that policyholders with higher-valued homes are paying less than their share of the risk. Conversely, policyholders with lower-valued homes are paying more than their share of the risk. FEMA says that Risk Rating 2.0 will work similar to existing property insurance policies in which every homeowner receives an individualized price quote. In addition to elevation and flood zone, FEMA says a 2.0 coverage quote will also consider flood frequency, multiple flood types and distance to a water source along with other property characteristics such as the cost to rebuild.

Although when first announced FEMA did not provide specifics relative to rates, they have given an overview of the changes to Florida residents. One out of five Florida homeowners (19.8%) should see a decrease in their yearly insurance cost. One out of 25 (4.2%), however, should see a yearly rate increase greater than $240. Also, FEMA says homebuyers don’t have to suffer sticker shock after closing since the new system will be more transparent. And the National Flood Insurance Program premium can still be transferred, including discounts from a seller to a buyer when the home sells.

Southwest Florida has some of the highest numbers of homes in the 100-year flood zones in the state. Monroe County leads the state with 89.1%, Sarasota has 26.3% and Manatee has 15.7%. Sarasota and Manatee numbers don’t, however, segregate the barrier islands. In addition, Pinellas, Miami-Dade, Charlotte, Lee, Brevard and Sarasota counties also appear in the top 10 nationally for the total value of real estate at risk.

What FEMA is trying to do is put more responsibility on those choosing to live in flood zones and then continuing to do so as the ramifications from global warming intensify. Their goal is to compensate for five decades of mispriced insurance. The way FEMA calculates flood insurance premiums is historic in its concept, going back to 1968.

There are also new FEMA flood maps that took effect in August. This could potentially change flood insurance premiums further in addition to the FEMA 2.0 changes. The bottom line is there are a lot of flood insurance changes going on, and it’s important that homeowners who live in a flood zone be aware of how it will affect your insurance premium at renewal time. At least we’re almost done with hurricane season.

Castles in the Sand

Here today, gone tomorrow

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

If you want to buy a property in the Bradenton-Sarasota area you have to act fast, and I mean lightning fast. Whatever comes on the market today will likely be gone within a week, selling at record-breaking prices every month.

None of this is a surprise to buyers who are out there beating the bushes daily or to their agents who are scurrying around looking for properties to satisfy the buyers lined up at their doors. But what’s interesting about some of these buyers is that they are coming from less traditional areas of the country. Local real estate professionals are reporting buyers from California, Washington state and other areas on the west coast of the country. When this was confirmed at the Island Publix check-out when I asked where all these people were coming from, I knew it was true.

Further confirmation of our hot market came from CoreLogic when they published the hottest metro areas in the country that people are relocating to. Bradenton-Sarasota came in at #14, Tampa at #5 and five other Florida regions were all in the top 15. The New York-Newark-Jersey City region was #1 in loss of residents.

Further, the National Association of Realtors reported in their July and August existing home sales reports the four regions of the country that are seeing the most home sales: The South continues to be the highest, maintaining over 40% of the market for both months; the Midwest comes in second at over 20%; the West is third, also over 20% and the Northeast is the lowest, just breaking 10% of the market share.

In Manatee County, the sales statistics from the Realtor Association of Sarasota and Manatee for July are: Single-family homes closed 5.8% fewer properties compared to last year. The median sales price was $430,000, up 19.8%; the average sale price was $566,595, up 19%; the median time to contract was six days, and the month’s supply of properties was .08 months.

Condos also closed fewer units, down 6.5%. The median sale price was $250,050, up 13.7%; the average sale price was $309,887, up 14.5%; the median time to contract was six days and the month’s supply of properties was 0.6 months.

By comparison, the National Association of Realtors reported the median price of existing single-family home sales for July was $359,900.

Now on to August: Single-family homes closed 2.7% fewer homes compared to last year. The median sale price was $430,000, same as July, up 19.4%; the average sale price was $579,647, up 20.5%; the median time to contract was five days and the month’s supply of properties was 0.8 months.

Condos closed 12.2% fewer units; the median price was $275,000, up 23.3%; the average sale price was $302,733, up 15.5%; the median time to contract was seven days and the month’s supply was 0.7 months.

By comparison, the National Association of Realtors reported the median price of existing single-family home sales for August was $356,700, slightly down from July.

In addition, the Realtor Association of Sarasota and Manatee reported that August was the 15th consecutive month that the price of single-family homes increased for this region.

At this point, I don’t think there is any relief for the poor buyers. The fewer properties on the market, the higher the prices will go, resulting in fewer actual sales, as we can see from July and August. Since we’re at the beginning of our busy sale season in Florida, it will be interesting to see where we are with available properties in a few months.

Not sure when it will end, but I’m pretty sure you will find out first at the Publix check-out.

More Castles in the Sand

Home renovations not for the faint of heart

Are you ready to be an island investor?

How not to derail your transaction

Castles in the Sand

Home renovations not for the faint of heart

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

So, you think you want to renovate, and you think you should do it before you sell. You’re done with the nasty old bathroom and a large kitchen island has been on your wish list forever. But do you have the stamina and patience required?

If you want to do home renovations, bathrooms and kitchens are the most popular; for your personal use, that’s one thing, but if you’re doing it to enhance your resale, that’s another. The philosophy of doing renovations prior to putting your home on the market is one of those calculations that depends on who you talk to and on the existing real estate market.

Right now, housing inventory is at an historic low and sellers tend to feel they can sell anything, so why go through the expense and hassle of renovating? Some of that is true – in today’s market, everything will sell eventually, no matter what condition it’s in. The issue is, do you want to attract the most qualified buyers in the fastest time frame and get the most money?

Many buyers today want a turnkey home in move-in condition, and are willing to pay a premium for a property that’s ready to go; this is why new construction always sells. They want to avoid the headaches involved in the renovation process, especially if it’s a retirement home or a second home. With so many $1 million and over properties on Anna Maria Island, buyers for these properties are going to be picky, even in this market. They will focus on the smallest detail and will look for high-end finishes and sleek modern baths and kitchens. If you’re in a position to give them what they want, do it; you’ll get the best offers and come out ahead in the end.

Whether you’re renovating for personal use or resale, the process can be tedious, long and fraught with problems. This happens to be something I know about since I just completed a primary bath renovation, converting a dated jetted tub to a walk-in shower stall.

When you start a project, sometimes the thing you think is the easiest is actually the most complicated. My energy was spent picking out tile, vanity, showerheads, mirrors and ceiling fans. When it came to the plumbing and electric work involved, I didn’t have a clue about the process or the cost. Well, that was my first shock, which also involved several issues to iron out from day one.

Some of it was funny, listening to the vendor in before the last one complaining about how they did their job, but most of it was annoying. Be ready for anything from a shortage of tiles to cracked tiles that require removal and placement of a new one, light fixtures that didn’t fit because of a plumbing line we didn’t know about and a missing toilet. The final insult was when my microwave decided it had enough after less than five years; at this point, I had enough after only three months. The day of the cracked shower tile I said to my husband, this is the reason new construction and gut renovation properties sell at a premium; I think by then he understood.

Finally, everything took much longer than I expected. Every professional trade company is blow-out busy; it appears everyone is coming out of the pandemic with money in their bank accounts and a pent-up desire to renovate. Also, expect to wait up to two weeks for appointments with most vendors.

I’m done for now, and maybe forever. Just keep in mind why buyers, even in a tight market, want move-in ready and why it might be a good idea to do the work before selling, as painful as it is.

Castles in the Sand

Are you ready to be an island investor?

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

Investing in real estate can be a lifelong dream or a recurring nightmare – usually, it turns out to be both.

What sounds better than owning an island home that you can rent for outlandish prices and also use? What can go wrong? Well, plenty can go wrong, but first you have to find the property to complete your dream.

Real estate typically provides a better rate of return than the stock market with the absence of the market’s volatility. Over time, the value of a property increases, building equity and providing more control over the asset than stock market investing. Historically the longer an investor holds onto real estate, the more money will be made. Since real estate is a highly tangible asset and will always have value, it can survive up and down real estate markets.

In addition, real estate investing comes with numerous tax benefits, such as tax deductions on mortgage interest up to federal limits, deduction of expenses and continuing cash flow. However, if your investment property is also one that you plan to use personally, there are restrictions on the time allocated for personal use in order to qualify the property as an investment and the ability to deduct certain expenses.

Looking for an investment property is entirely different than looking for a home to live in. Investors are or should be concerned with cash flow and the vacancy factor. Ideally, an investor wants to at minimum break even, that is cover all the property expenses with the income from rentals. In fact, if you’re looking for an investment property, that should be your first question – how many times does it rent and what is the annual rental income? Also, if you’re looking for a condo investment, read the condo documents to determine restrictions on renting and advise potential renters of the association’s rules and regulations.

When calculating expenses don’t forget to include property tax, mortgage payment, homeowner’s fees and repairs. Conventional mortgages for investment properties could be a slightly higher rate than owner-occupied properties. In addition, restrictions from Fannie Mae and Freddie Mac will limit the number of conventional mortgages an investor can have. This is usually four, and investors who plan on making more investments may need to look to the private money market for financing.

Most investment buyers on Anna Maria Island are looking for a property to hold long-term since the property values go up almost daily and rentals are lucrative and plentiful. But some are planning to buy low (good luck with that), make improvements and flip the property to another buyer.

There is also an emotional aspect to owning investment property. When your phone rings in the middle of your daughter’s wedding and the tenant has a major plumbing leak, you have to at the very least make a couple of calls. This is why many investors hire management companies to handle emergencies and screen tenants. Hiring a management company, however, does cut into your cash flow.

Real estate is a vibrant business that creates a ton of buzz and is something everyone loves to talk about. Remember the old adage, God keeps making people but not land. On Anna Maria Island, this adage is on steroids; no more land but lots more people.

Castles in the Sand

How not to derail your transaction

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

It’s the night before your home closing and your broker calls and says she was just notified by the lender there is a problem with the title and closing is postponed. The moving trucks on both ends of the transaction are ready to roll, your buyer’s son has already signed up for his new soccer team and everyone involved is having a breakdown.

Last-minute issues come up in almost every real estate transaction and title problems can be the most difficult to deal with. The best way to avoid the drama is to be prepared and be proactive, whether you’re the buyer, the seller or the real estate professional.

If you’re the seller and you have had any kind of county permit pulled for work performed in your home, like a new air-conditioning system or plumbing work that required a permit, make sure that the company that pulled the permit has sent a release to the county closing out an open permit. Same thing if you are having a debate with a contractor and are withholding funds; they may have put a “mechanic’s” lien on the property until they have full payment. Best to get this settled and the lien released before you go into contract with a buyer. Of course, the ultimate title issue is when one of the buyers becomes seriously impaired or passes away. Legal issues and delays will naturally follow, putting the transaction in jeopardy.

Another big derailment issue is financing. A contract for a real estate sale that involves financing will state how much money the buyer is financing and a time frame for application and approval, as well as the amount of earnest money being collected. To avoid any issues with a buyer not qualifying for a mortgage, all buyers requiring financing should be prequalified for an amount equal to the purchase price and amount of funds being borrowed.

The next big issue when working with a buyer who is financing is the property appraising. We are in such an evolving market, with sales numbers going up daily, that determining the appraised value is like trying to hit a moving target. Since appraisers can only use closed properties in their analysis and not properties for sale or under contract, it’s not surprising that appraisals come up short. Buyers need to be prepared in the event this happens to them. Having more cash ready to put down a larger down payment is generally the best thing to do, but in this market, don’t expect the seller to renegotiate the price down.

Engineer inspections are notorious for derailing a sale. Sellers have to get all their ducks in order, making sure the appliances, HVAC, roof and plumbing are in working order if that is what you represented to the buyer. And, at the time of the final walk-through, everything the buyer expects to be there under the contract should be there and working. This includes a buyer expecting the property to be broom clean. More than one transaction has fallen apart at the last minute because the dishwasher quit the night before.

Finally, if the buyer and seller have negotiated personal property to be conveyed with the sale, all parties should be clear on what they are. The more detail you can include in the original contract, the better it will be at the end. If you’re leaving two refrigerators, specify color and model; and if you’re leaving the family room furniture, try not to have your new puppy chew one of the legs the week before closing.

Many of the last-minute problems can be avoided with just a little planning. Don’t let the sales train get off the tracks – once it does, it’s pretty hard to get it back up and running.

Castles in the Sand

House hunting wars

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

On the HGTV channel’s show “House Hunters,” they make buying a home civilized and stress-free. A smiling real estate professional shows you three homes all in your price range, all in acceptable condition and all with the right number of rooms. Nothing to worry about here.

Unfortunately for buyers who are trying to buy a home right now, it may be a rude awakening from the fiction of “House Hunters” to the reality of bidding wars. And though this may be a bloodless war, by the time you are done you may feel like you’ve been traumatized, nonetheless.

A few months ago, I read a very clever piece by Kris Frieswick, a columnist with a national profile, about the five stages of grief that accompany the loss of a bidding war. Although it was meant to be humorous, it is really an important lesson for today’s house hunters, the essence of which I will share with you.

Stage one, denial:  I didn’t like the house anyway. It was a stupid house. Keep saying this until you stop thinking about the stupid house.

Stage two, anger:  Maybe the house wasn’t so stupid after all, maybe I’m just a loser. I can’t win the lottery, a pickup basketball game or Candyland with my 5-year-old niece. At this point, Frieswick thinks the loss of the home results in the poor buyer starting to throw things – totally unnecessary since the winning homeowner has no clue what you’re doing.

Stage three, bargaining:  You can’t believe you lost, even offering 5% above the winning offer. What’s wrong with you? The problem is the winning offer was all cash, 30% over asking and included a new Range Rover and same-day closing. Now even the broker thinks you’re a loser. Whatever you do, don’t watch HGTV with those picky, delusional buyers who always seem to find the perfect house – what do they know that you don’t?

Stage four, depression:  At this point, you’re ready to give up; you will never find a house. You are stuck for the rest of your natural life with the itty-bitty kitchen without an island and your grandmother’s dining room table you were saving for your new home. Now would be a good time to deprogram HGTV from your remote.

Stage five, acceptance: Finally, you’re ready to boot up realtor.com again to see what you missed while you were grieving. Have a glass of wine, if there is any left after your depression, and start making a list of what you must have in a home and what you can give up.

This stage will take time – maybe even until after this insanity of the real estate market has calmed down. In the meantime, look around your current house and see what you can do to make it more marketable when the time comes. If you’re in a rental, embrace not having to paint the walls or renovate the bathroom – it’s someone else’s problem.

Bidding wars in home-purchasing doesn’t resemble at all an elegant Sotheby’s art auction. Buyers and their brokers will try any weapon in their arsenal to make their offers look more appealing and financially better for the seller. You will have to kiss a lot of frogs but in the end, you will get over all of the rejections when you eventually find the perfect home and you’re able to reflect on the humor of it all.

Castles in the Sand

Buying a condo on the beach is bound to change

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

How many people do you know who actually hired an engineer to inspect their purchase of a condo? I don’t mean just a building inspector to make sure the appliances, plumbing and air conditioning systems are working properly, and there are no obvious leaks from an upper unit, I mean an actual engineer. Well, get ready for the age of geotechnical engineers.

Geotechnical engineering is the branch of civil engineering concerned with the engineering behavior of earth materials using the principles of soil mechanics. In Surfside, Florida, the town sent letters to the owners of almost 40 properties that they begin safety inspections ahead of their 40-year recertification. It was stressed for those buildings on the ocean that they hire not just a structural engineer but a geotechnical engineer to analyze the foundation and subsurface soils.

According to the American Society of Civil Engineers, geotechnical engineers specialize in understanding what’s beneath the ground’s surface mostly during pre-construction. However, experts can also be brought in to inspect the strength profile of the soil below an existing building to determine how much the building has settled over time.

Because of the Surfside tragedy, coastal municipalities and buyers of these properties will be taking a closer look at existing properties. Recently in Holmes Beach, a small condo building was voluntarily evacuated by the town because the balconies and stairways had cracks that required further inspection.

As a buyer of waterfront property, doing your due diligence is now more important than ever. In the frenzy of an over-heated real estate market, buyers are waiving structural inspections in order to enhance their offer. However, and I’ve said it before, this would be a very big mistake, particularly for waterfront properties on barrier islands.

Buyers are usually good at reviewing condo documents and financial records of the association they are buying into but frequently do not ask about board minutes that may include discussions regarding special assessments. To be fair, minutes from board meetings are generally only available to current owners and special assessments need only be disclosed to potential buyers once the board has voted on them. Nevertheless, an honest homeowner would indicate to a buyer who is already reviewing the association’s financials the potential of another assessment or correction of a structural problem where the funds are not yet allocated. Remember the spirit of disclosure laws, whether written or verbal, is to reveal defects in the property that could have a future effect on the value of a property.

Going forward, contracts of sale for beachfront and island properties, both single-family and condos, could contain clauses related to disclosure of any recertifications already performed or specific geotechnical testing that may have been done. Also, it’s reasonable to expect that buyers of these properties may also hire their own geotechnical engineers in addition to structural engineers and traditional home inspectors.

Twenty years ago, when I purchased a waterfront condo, I did not have a professional inspection. My husband and our friend went through the unit and determined everything looked just fine. I guess they did a good job because we’ve never had any problems with systems and certainly nothing structural. However, I look back now and wonder what were you thinking? Make sure your thinking is better than mine was; we’ve learned a lot this year, let’s put it to good use.

Castles in the Sand

Homes with docks more valuable than ever

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

You’ve probably read it dozens of times in real estate advertising: “Buy a home for your boat.” Homes with access to a boat dock have always been popular, but like everything else that COVID-19 has influenced, popular doesn’t even come close.

Because of COVID, pleasure boating filled a void left when get-togethers, bars and restaurants were unavailable because of lockdown restrictions. The obvious pastime was outdoor activities, and for all waterfront communities in the country, boating became all the rage.

According to the National Marine Manufacturers Association, boat sales reached a 13-year high in 2020. This is up 12% from the year before, with more than 310,000 powerboats sold in the United States last year. Being able to work remotely made it even more convenient for potential boaters to dive into their new hobby.

Naturally, houses with private boat docks, especially with boat lifts or the capacity to build one, suddenly became even more in demand than before. Properties without actual docks, but which had seawalls or bulkheads and deep water, also became more valuable to buyers with the hope they could build a dock. That said, the ability to build new docks isn’t as easy as it sounds.

If you purchase a home that does not have a dock or worse, a seawall, there is a rigorous permitting process by both state and federal agencies. Construction on marine land falls under the jurisdiction of the U.S. Army Corps of Engineers, but they hand it over to Florida’s Department of Environmental Protection (DEP). It’s an expensive, time-consuming process that makes homes with existing docks that much more valuable.

For example, if you did not have a home with a dock for your 40-foot vessel it would cost anywhere from $25 to $30 a foot per month in a commercial marina. That calculates to $1,000 to $1,200 monthly. If you really want to buy a home for your boat, you can. Boat slips are available for sale in some of the high-end marinas, such as Longboat Key Moorings on Longboat Key. That will run you about $100,000 to $330,000, depending on the location of the slip and the size of the boat.

How much value does a dock with the proper permits add to the value of the home? This is one of the multitudes of waterfront value questions that every real estate professional has struggled with for decades. Putting a value on waterfront property alone is very difficult because of the diversity of waterfront locations in Florida. Adding docks, seawalls and the ability to build is a whole other level of calculating value. As with most real estate, comparing similar properties that have sold is the gold standard. However, finding waterfront property with the right kind of docking is not so easy. And just to throw another wrench in the mix, we have many waterfront condominiums in Manatee County that come with docks.

If condo living appeals to you and you want a dock for your boat this could be an alternative. Make sure you understand the difference between a dock that is deeded to you and a dock that is part of the association’s limited common elements. A deeded dock puts all of the maintenance responsibility on you as the owner; a dock that is a limited common element is maintained by the association.

Buying a home or condo with a boat slip or the ability to construct one requires more than the average amount of due diligence. Do your homework and make your boat happy in its new home.

Castles in the Sand

COVID-19 has changed the meaning of home

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

If it’s true that everything old is new again, we may be living through the real estate version of that idiom. Small cities and small towns sprinkled over the entire United States are having a resurgence in popularity. The COVID-19 experience has brought a new appreciation of small-town living with the help of remote working.

I am mildly obsessed with the Netflix show “The World’s Most Extraordinary Homes,” which I discovered in my dentist’s office while waiting for my new crown to be finished. The show is pure escapism featuring unbelievably expensive homes, some in exotic locations all around the world. But the real estate trend in the United States at this time is not for extraordinary homes but for modest, get-back-to-basics homes in anything but exotic locations.

Smaller cities and regions are turning out to be the big draw for home purchasing. Places like Topeka, Kansas and Decatur, Alabama, where homes would sit on the market, are now experiencing a shortage of inventory similar to the coastal regions outside of major metropolitan areas. This all started with COVID lockdowns and the desire to get out of densely populated areas, but it is now becoming a trend.

Young couples and singles are taking another look at the mid-sized cities and small towns they grew up in and saying this doesn’t look so bad anymore. I can park my car, get a table at a restaurant and get back into a comfort zone with family and old friends.

The only problem is investors are also looking at these areas, snapping up single-family homes and turning them into rentals. Investors are currently representing about a fifth of annual home sales, competing with local buyers and newly-relocated buyers. These smaller regions are experiencing bidding wars just like what we’re finding in coastal Florida.

The Realtor.com Emerging Housing Markets Index compiled in July represents the top 50 metro areas in the country. The top 20 in the index have an average population of just over 300,000, which is less than Manatee County. The index identifies the top metro areas for homebuyers looking for a good appreciating housing market and attractive lifestyle. These areas are ranked according to real estate market data and economic health and an interesting read for the real estate nerds out there, but I’ll just touch on a few of the areas.

First of all, Florida had two regions both represented in the middle of the index and both in the Panhandle – one in Fort Walton and the other in Pensacola. The other 48 regions are spread out all over the country, starting with Billings, Montana as number one and ending with Akron, Ohio at number 50. In between, there are cities like Raleigh, North Carolina, Colorado Springs, Colorado, Yuba City, California and Prescott, Arizona. Home prices in the top 20 markets in the Emerging Home Markets Index have risen 13.7% on average in the past year, per Realtor.com. This is less than the national average but impressive nonetheless. If you are interested in seeing the entire list, you should be able to find it on Realtor.com’s website.

So, is it back to the future? Have we gone from a more complex sophisticated culture to a more down-home 1950s and 1960s vibe? That, of course, remains to be seen. If COVID has changed things that much it wouldn’t necessarily be a bad thing – everything in life can’t be exotic, and I did love The Donna Reed Show.

Castles in the Sand

The always-evolving real estate market

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

Not everyone wants to own a home of their own. Those of us who have always owned rather than rented understand the challenges faced in ownership, whether you’re in a single-family home or a condo. I know the feeling; there have been many days when I wished I didn’t have the responsibility of home ownership, and an interesting concept floating around the country may be right up my alley.

There are high-end rental communities being built by top single-home builders catering to individuals who do not feel they need to buy a home. This trend is increasing and appealing to a variety of people ranging from young professionals who have not been able to fight their way into the housing market to empty-nesters who are taking their equity and opting for a turn-key lifestyle.

These “build-to-rent” single-home communities are designed exclusively for rentals with high-end finishes and amenities that are geared to appeal to the luxury market. Rents in the $2,500 to $3,000 range can make sense for people with good incomes who may not be worried about accruing wealth in their homes. It’s kind of the perfect arrangement for seniors who aren’t dependent upon building equity and want a fresh high-end home to live in.

And so far, it appears this is not going away. The build-to-rent segment of the real estate market is growing. In 2020, 60,000 build-to-rent homes were constructed, and in 2021 it is expected that the number will increase to 80,000. Renting is looking better and better to a large segment of the population, allowing for a quick relocation for job or family responsibilities.

Before we go over the June sales statistics, I thought I would share yet another “best place” report recently published by Southern Living Magazine. This one is America’s best beach towns for retirement. Thankfully, Bradenton and Anna Maria Island were not on this list; however, five other Florida cities were, three of them on the west coast – Naples, which came in number one, Sarasota, Venice, Vero Beach and Stuart. And let’s give recognition to our neighbor Lakewood Ranch for being named the best-selling community in the country with 1,535 new home sales through the end of June.

Here are the June Manatee County sales statistics reported by the Realtor Association of Sarasota and Manatee.

Closed single-family homes were up 24.3% from last year; cash sales were up 129.9%; the median sale price was $405,305, up 24.7%; the average sale price was $576,522, up 37.5% and the median time to contract was five days.

Condos closed 38.8% more this June compared to last June; cash sales were up 61%; the median sale price was $280,000, up 30.7%; the average sale price was $331,691, up 39% and the median time to contract was six days.

Available inventory continues to be low; about a six-month supply for both single-family homes and condos. Sarasota County is also experiencing higher sales prices every month and low inventory as well. Also impressive is the percentage of cash sales from last year for single-family properties, up just under 130%.

Obviously, it’s still a great seller’s market, but don’t assume the market and personal family issues can’t change on a dime, making renting very attractive to some. The real estate market continues to evolve, offering more and more lifestyle options. In an ever-changing world, it’s always nice to leave your options open.