Affordability, Value & Foreclosure

By: Javier Gines

My first lesson learned in Accounting 101 was that one transaction has to be recorded in a double-entry bookkeeping system. Apparently, the founders of the Medici Bank in the 12th century figured that more than one account are affected by a single transaction. In other words, there is a connection between more than one factor in an event (in this case, a merchant transaction). We see these connections everyday in simple economics. The more abundance of a product the less it cost. The more mileage your car has the less retail value.

Major markets such as bonds and stocks are also inter-connected. Housing is no different. That is why I pay a lot of attention to economic indicators. Even though sometimes they don’t apply to my market since real estate is local in nature, they will give me a “head start” to either things to come or possibilities. That way I can keep my sellers informed with the latest information to make the appropriate decision based on timing and market conditions. This alone could mean thousands of dollars either saved or gained for my clients.

It is no secret that values are dropping rapidly and there are a number of reasons for that. It is also no secret that Central Florida is “OVER PRICED”. That is one reason why we have so many foreclosures. Professionals are very quick to point the finger at adjustable rate loans but we seem to overlook why these loans were sold in the fist place.

The connection here is “AFFORDABILITY”. Many people couldn’t afford the normal fixed rate 30 year loans. So as an option for a lower payment, the adjustable loan was sold to them. No matter how you analyze the situation it all comes down to the purchase price. A market starts running into problems once the average purchase price exceeds 3 times the average income per capita in any given region. That is why the job market is such an important factor in housing. People’s income will determine their housing affordability.

At the end of the day, value is determined by what a person is willing to pay for an item. What people can “AFFORD” will determine what a person is “WILLING” to pay for that item.

Many economists differ on where are we in this downturn. Some believe that we have already bottomed and others believe that we are only half way through. That will be determined locally as certain areas will be able to bounce back quicker and higher than others. Some areas haven’t suffered a price decline at all.

I encourage sellers to recognize what kind of market they are in and consult with the local professionals in terms of valuation and affordability. There are statistics that can pin point the actual percentage of buyers per price range. It's all a numbers game. The higher the percentage number in the price range your property is listed, the faster your home should sell.

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Prepare Your A/C Unit For The Summer

By: Adrian Colon

Summer is around the corner and if you have lived in Florida during this season before, you know how hot it gets. That mean it is time to turn on your A/C. Do you know how old is your air-condition unit? This information is located in the information tag on the side of both units (interior handler and exterior unit). When was the last time the unit was serviced? I always recommend a regular maintenance service in order to keep your A/C working properly for many years. However, the following are simple “DIY” (do it yourself) check ups in between maintenance service.

Check compressor during startup, Listen for any unusual sound, such as squealing or groaning. Is condenser fan operating properly? (Warm air should be discharging from unit). The coils for the compressor should be clean for proper airflow thru unit. Check that the unit is level and on a solid pad or blocks. A foam cover should protect the refrigerated line. During operation if possible, check cooling coils for frosting (ice buildup), usually the result of an insufficient airflow or lack of refrigerant.

Check for signs of leakage, and areas of rust and corrosion in furnace-mounted evaporators. Look at the drain line and see where the water is going and check for leaks on the line. Drain line should go the exterior of the home. Make sure the coils are free of dirt. If coils are dirty the unit will work harder and ice buildup can happen when insufficient airflow thru unit. Check the blower for unusual noise and vibrations.

Blower coil in the attic should be well ventilated. Unit is available and accessible to be inspected. Check the drain line to see where is condensation going. Drain line should go the exterior of the home or to the gutter, or if unit has a drain pan check for the automatic shut off switch located at the end.

Check ducts and registers airflow and temperature after 15 minutes of operation. Check whether all rooms are air-conditioned and the return grilles are efficiently located thru out the home. If rooms do not have individual returns, check for a large central return grille, and inspect the filters. (Often located in the hallway). Check ductwork for open joints, signs of air leakage, and uninsulated ducts (particularly in the attic and crawl spaces).

These steps are really easy to do and will contribute enormously to the useful life of you unit. However, they will not replace a maintenance call from a professional. Remember that keeping your A/C unit is very important to regulate temperatures but also controls moisture through out the home. New units are not cheap. So it is a wise decision to extend the life of your unit as much as possible in order to get a proper return on your investment.


About the author: Mr. Adrian Colon stated his Building inspection career over 5 years ago. He is currently a member of FABI, Florida Association of Building Inspectors as well as NAHREP, North American Hispanics of Real Estate and Professional in Central Florida. In addition, Mr. Colon is also a Certified Disaster inspector for FEMA and PaRR Inspections. Adrian is licensed and insured in Florida to perform all types of building and commercial inspection, as well as termite WDO (wood destroying organisms) inspections. Adrian can be contacted at 407-729-7418.

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Cash Back Scheme Gets Agent Convicted

By: Javier Gines

Last week I ran across this story about a real estate licensee and 6 other defendants getting convicted by a federal jury on fraudulent charges against them. Apparently, Mr. Brandon L Baum, a licensed real estate agent would offer his clients substantial cash back at closing under the guise of repair costs that they would be able to use for their personal benefit as long as they agreed to purchase the property at an inflated price.

Mr. Baum was working closely with a mortgage broker who would facilitate the submission of fraudulent loan applications for the potential homeowners that could not qualify for the loans. False information would be provided on the loan applications. In some cases, Mr. Baum and his team would provide temporary loans to buyers for down payments with the understanding they would be reimbursed at closing from the purported remodeling or repair costs, marketing services fees and other undisclosed disbursements. The buyers in those cases would falsely represent the sources of the down payments.

Mr. Baum would present the sales contracts to the seller’s agents at prices far above those listed on the MLS. The seller’s agents would then present the contracts to the sellers by which the sellers would agree to pay for the purported remodeling, repair and other charges. Once the purchase terms had been approved by buyer and seller, the seller’s agents would, in many cases, increase the MLS list price to an amount equal to or above the agreed inflated purchase price to avoid detection by the lenders. At closing, the title companies were directed by Baum, sellers’ agents and the sellers to issue checks from the sales proceeds to various entities for purported remodeling, repair costs, marketing service fees or other fees.

Now as I am reading all of this, I notice something very interesting. 3 out of the 7 indicted were buyers.

It is extremely important to be careful with the representation you select. As we get by this difficult period in which the housing market is going through, there will be unscrupulous real estate professionals who will be willing to commit fraud or get you involved in an unlawful transaction in order to get a deal.

This event took place in Oklahoma and I don’t know what kind of resources their particular county offers to individuals who have a hard time qualifying for a home loan. I do know that in Central Florida there are numerous programs that could help people get their financials in order, assist on a down payment and get them into a property. There is no need to get involved in a situation like this. In reality, it’s not worth it either.

Remember! Good representation will get you far ahead in a transaction. In this case, maybe out of Jail!


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My Safe Florida Home Program

TALLAHASSEE, Fla. – April 2, 2007 – Florida officials say they’ve cut the first checks for a handful of residents who strengthened their home’s storm preparedness under the My Safe Florida Home (MSFH) program.

It’s a drop in the bucket – only $30,000 to 10 homeowners in five counties – but more checks will be sent during this phase of the program. The homeowners, who received free wind inspections during the pilot phase of the program, are being reimbursed for half the cost of a variety of home improvements, including hurricane shutters, reinforced garage doors and roof enhancements.

More than 4,000 homeowners who participated in the pilot phase of the program have applied for matching grants from the MSFH program. These homeowners are currently working with licensed contractors approved by the MSFH program and making recommended improvements to their homes. Once the work has been completed, the state will reimburse the homeowners for 50 percent of the actual cost of the improvements, up to $5,000.

“It is my goal to increase awareness about the financial and safety incentives available to homeowners that choose to mitigate their homes and better protect their families,” says Florida Chief Financial Officer Alex Sink, who oversees the Department of Financial Services.

The MSFH program offers eligible homeowners a free home inspection by trained and qualified hurricane mitigation inspectors. Homeowners who have received these inspections also have the opportunity to apply for a matching grant of up to $5,000 to make recommended improvements.

During the MSFH program’s 2006 pilot phase, more than 14,000 free wind inspections were conducted in 17 counties. Along with an inspection report, the 14,000 homeowners received a grant application to apply for matching funds, and the department received applications from more than 4,000 homeowners to date.
The MSFH program is currently on hiatus but Sink says it will resume statewide. For more information, visit the MSFH Web site at

http://www.mysafefloridahome.com

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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The Green

By: Javier Gines

Robert Redford has been involved in ground breaking independent productions for quite some time. His latest project is "The Green" which will air on the Sundance Channel starting April 17 at 9pm. I encourage people to watch this show and try to get a little more involved in the enviroment since our most valuable real estate asset is the land in which we build on. Click here for a preview.

www.sundancechannel.com/thegreen/#/homePage

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Our Advice Before Improvements

By: Javier Gines

The other day I was watching a documentary on residential real estate in California. The show featured a couple who has spent more than a million dollars in renovations during a 16 year period and decided to move from Beverly Hills to San Diego. The problem was that in their million dollar renovation, they hired a couple of artists and created a sort of forest ambiance with fake built in trees, murals and a waterfall in the living area. I have seen my fair share of distinctive taste but this was nothing close to what I have ever dealt with before.

The property has been previously listed with two brokerage firms and not sold. The couple already bought the second home in San Diego and was currently paying two mortgages. As you might know, California has the highest priced real estate in the country so that means this couple was paying for two multi-million dollar homes at the same time.

The third agent they contacted was my kind of agent. She flat out told them, “all of this looks pretty, but it has to go!” and so they did. Property sold for 2.8 million and another happy ending.

Many homeowners and real estate agents get disconnected after the transaction is closed. The truth is that a good real estate agent can do a lot more than just help you through a sale and purchase. They can provide excellent guide on what improvements can raise your property value. Most of the time, homeowners make decisions on renovations based on personal taste, opinions of a contractor or a designer and loose sight of the possibility of selling the property and moving on in the future. The outcome of the improvement might look great but not deliver the return you expect at the sale.

My advice on this subject is to maintain a relationship with an agent you trust and get their opinion before making any major renovation on your home. If the agent is a knowledgeable one, he will be able to determine if the improvements will eventually pay off or at least make you aware of what changes will be needed whenever you decide to sell your property.

In the case that you do not have an agent and would like an opinion of this kind before a major renovation feel free to contact us at 407-641-5325 or Javier@f-ellecompany.com. Like I have mentioned before, our firm is committed to our client’s profit at the end of the day.

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