Build New or Buy A Resale?

 

Get everything you always wanted in your dream home.  The right location, the right floorplan and all the right upgrades...or settle for a resale home that almost has all you want. 

The decision gets more difficult as the spread between the cost of a new home and the cost of a resale begins to widen.  Resales can be very inexpensive due to foreclosures.  But they are also much riskier due to possible abuse by the former owner and especially the potential of a hidden mold problem due to having the electric turned off for a prolonged period.

Here is a condensation of an article in the Orlando Sentinel that discusses the rise of new home prices.  This trend is already taking place in Palm Coast as our new home builders begin to fill their pipelines with orders.  As I shop for the right builder for prospective home buyers I see this happening first hand.   

 "Rising costs could dampen new-home market TALLAHASSEE, Fla. – DEC. 17, 2012

 Just as Florida’s new-home market prepares to finish its strongest year since the housing slump, prices for drywall, cement and lumber are fast outpacing inflation.

At a time when inflation is running about 2 percent, lumber prices throughout the country are up 35 percent from a year ago, according to the National Association of Home Builders.

The cost of interior walls for new homes has increased more than 14 percent from November 2011, according to a report released Thursday by Associated General Contractors of America. And suppliers of that drywall, also known as gypsum board, have put builders on notice prices may spike an additional 30 percent in the coming year.

“We did get notice the gypsum board would be going up a substantial amount, and we are seeing pricing pressure from other suppliers and from labor,” said Ken McDonald, president of David Weekly Homes’ Orlando division. “It’s a balancing act. We will be raising prices to cover the increases. We’ve been doing that this year.”

The pressure on prices is mainly the result of two things: rising demand from homebuyers eager to take advantage of record-low mortgage-interest rates, and supply problems because of the shutdown of manufacturing plants in recent years. In terms of demand, for instance, David Weekley Homes started 80 houses last year but expects to end this year with double that number.

McDonald said the price increases also reflect a home-construction industry that is trying to rebuild its profit margins, which were decimated by the housing slump and Great Recession.

“Pricing all went to an all-time low, and now business is trying to get their margins back,” McDonald said.

“I think it will slow the housing recovery, because new-home buyers are very price-conscious,” Basu said Friday. “What builders might do is move their product to be more upscale; affluent buyers are more likely to spend 5 (percent) to 10 percent more to get what they want. … Value-oriented buyers are more likely to purchase an existing home.”

Greg Hardwick, president of Hardwick General Contracting Inc. in Maitland, said a lack of skilled labor is also going to affect the new-home market in 2013.

“The thing that may get us next year is the labor. There is a huge theme throughout the industry that not enough masons, drywallers and framers are available to meet demands,” Hardwick said.

“We’ve lost a lot of that labor and those resources. They’ve gone to different industries, and now the demand is going back up.”

Copyright © 2012 The Orlando Sentinel (Orlando, Fla.) Distributed by MCT Information Services.

 

THEIR TEAM...MY TEAM...Emphasis on Listing vs Emphasis on Buying

By holding an open house in Palm Coast Plantation every week I can really stay on top of what property buyers are looking for.  And, surprise, many of them don’t know.  At least, they don’t know yet.  They have not made some important decisions yet:  Build a new home or Buy a Resale?  Buy a Single Family Home or a Condo?  Live in a gated community or not?

 “Teams” are the new concept at large real estate agencies.  They are small groups of specialists.  The emphasis is on getting Listings.  A  group of  three or four agents within the agency work together and pool their commissions. 

A common way to organize an internal real estate team is like this: One member of the group is the Listing Specialist.  The Listing Specialist responds to listing leads, gives the listing presentation and closes the deal with the Seller.

Then there is a Buyer Specialist.  This member is responsible for qualifying and driving buyers around to look at properties.   Instead of spending time soliciting listings, the Selling Specialist stays on top of what properties are on the market and puts together the classic sales presentation… Show one awful house that makes your listing look good.  Show one house like your listing that is priced way higher than yours.  And then show them your listing and close the deal.  It’s called “three and out”.  You see it in action on the real estate shows on TV.  (Worst case is to get a prospective Buyer who loves to look at houses and will have you driving them around every weekend for the next six months.)  

The person the Listers and the Buyers will spend most of the time talking with is the team’s Administrative Assistant.   The Administrative Assistant usually has a real estate license and can deal with almost all the  “After It’s Listed” and “After its Sold” interactions with both the Listers and the Purchasers. 

This makes the team very efficient. The Listing specialist can be out getting more listings and the Selling specialist can be out showing the group’s listings  to well qualified Buyer prospects.  And the Administrative Assistant can be herding the cats and passing out catnip.

But what about me?  I am a Buyers Agent.  A New Construction Specialist.  A homesite finder.  I don’t do Listings.   My goal is to find a Buyer Prospect, qualify them as “Hot, Medium or Cold” and work intensely with the Hot ones to find them the right property.  I can either earn a commission, if I find them the property myself.   Or I can earn a referral fee if I refer them to another Real Estate agent.

THE BUYING PROCESS:   I do a “Needs Analysis”.  If it turns out that a buyer wants to build a new home, I start looking for a lot and select builders who fit their price range.  (I talked about finding the right lot and the problem of estimating the cost of fill dirt in a previous blog)

These are either “Level One” builders who know the cost of every nail they need to build the houses they offer.  Level One builders generally target the entry level and lower priced markets.  They are reluctant or refuse to do major changes to their house plans.  They often build and sell  ‘Spec” homes.  (They are now calling them “Move In Ready” homes).  They buy a lot, build a house and put it on the market for sale.  They are often identifiable by a professional, salaried sales staff who work for them exclusively and sit in a model home. 

Then there are what I call “Personalized” builders.  They start from a group of house plans they have already built.  They know the cost to build those houses.  Then they interact with the Buyer to make major personal modifications such as enlarging the Master Bedroom and bath.  Including a third garage.  Moving a wall.  Eliminating some high cost features to stay within your price range.  Adding some upgrades you want.  These “Personalized” houses cost a more per square foot-there is risk involved costing out your changes to their standard house plans.    

Then there are the “Custom Builders”.  They design your house from scratch and are generally at the high end of the price scale. They, too, like to start by showing you houses they have built and know some cost information about.  But the emphasis is on the drawing board phase.  They are builder/architects and target the Luxury New Home market.

MY SPECIALTY:  Navigating through finding the right homesite and selecting the right builder is what I have concentrated on in Palm Coast since 1996. 

But not every prospect I meet is sure they want to build a new home.  They might be able to find just what they want on the resale market for much less.  Or maybe they should really buy a condo…So much less to take care of.

MY TEAM:  I have a team, too.  But I have a different kind of team than I would have if I was a Listing Specialist. 

As a Buyer’s Agent, I specialize in identifying and meeting Buyer needs.  So Ted’s Team consists of me—a New Construction Specialist. 

And a Resale Specialist with an intimate knowledge of MLS listed homes and our resale market.  

And a Condominium Specialist who knows the details about every condo complex in Palm Coast. 

Together we help you decide what you want, identify the best candidates and help you to negotiate and purchase  your selection.

New Construction or Resale, or Condo…if you are planning to purchase a property we have the knowledge and expertise to help you purchase the right one.  Work with me to analyze and prioritize your needs and to develop and efficient and effective plan to scour the market for options.  Use me and my team and you will gain important knowledge and  insight that will help you make good decisions and to help you find,  negotiate and purchase the right property .

Talk To Ted !

A Slippery Slope...Estimating Fill Dirt Costs

One of the first things you have to do if you want to build a new house is pick out a lot.  One of the most important things about selecting a lot, other than its neighborhood and location, is how much it will cost to prepare it for building.  You will need to clear it and fill it with dirt so that it is high enough to meet the code requirements.  Clearing costs are not a big problem for your builder to estimate with reasonable accuracy.  Spreading and grading the fill dirt is not a big problem to estimate with reasonable accuracy, either.

But estimating how much fill dirt you will  need before you make your offer to purchase is a big problem.  Many builders offer a fill dirt allowance as part of their “site preparation costs”.  They generally provide “10 loads of fill dirt”.  And often that is not near enough.

Florida is low.  “Buying Swamp Land in Florida” use to be a well-recognized joke.  But Palm Coast is now “developed”.  Buyers are not buying swamp land for their home sites.  But it use to be.  They dug all those nice canals and made all those nice lakes here.  And they piled muck from those canals and lakes right alongside them.  This land became our building lots.  Palmettos and Pine trees grew up, but the muck is still there.  So on some lots you find out, after you clear them, that you have to get rid of some muck and replace it with fill dirt.  Sometimes lots of muck.  Or sometimes it’s just a low lot.

You really can’t tell how much fill dirt you will need until you pay for a survey and clear the lot.  And you generally won’t spend money to do that until after you have purchased the lot and are ready to build. 

At about $100 per load, your ten load allowance can get used up in a hurry and you can wind up with a large and unexpected bill for extra fill dirt.

There is a “Feasibility Study” contingency clause in most Purchase and Sale Contracts for Vacant Land.  It is comprehensive and looks great, but won’t protect you from needing extra fill dirt.  You have to have the survey and clear the lot to see what you’ve got. 

I recommend you select your lot and your builder at the same time.  (Talk To Ted !)  Ask (insist) your builder visit the lot you have selected quickly, before someone else grabs it…and someone will if it is in a great location and offered at a bargain price.  

Your builder will have to cover himself six ways from Sunday because he also cannot know much about the lot until after survey and clearing.  But he has much more experience than you evaluating and purchasing lots, so his opinion is very important.  Ask him to put his guestimate, with his disclaimer that it is only his best guess, in writing.  And ask him if his contract says that you will be charged for extra fill dirt at cost or will it be charged at “cost plus”.

Darrell Cone (Darrell Cone Dozer Service) in Bunnell (386-437-5788) has been clearing and grading our Palm Coast lots since the ‘90s.  Maybe longer.  I plan to interview him for some up-to-date pricing estimates and some war stories about fill dirt and include them in a blog post.  Meanwhile, here is the Feasibility Clause I talked about (edited by me). 

And please POST YOUR COMMENTS if you have advice, information or experience you can add about evaluating a lot before you sign a contract to purchase it.

Feasibility Study: Buyer will, at Buyer's expense and within __ days from Effective Date ("Feasibility Study Period"), determine whether the Property is suitable, in Buyer's sole and absolute discretion, for use. During the Feasibility Study Period, Buyer may conduct a Phase I environmental assessment and any other tests, analyses, surveys and investigations that Buyer deems necessary to determine to Buyer's satisfaction the Property's engineering, architectural and environmental properties; zoning and zoning restrictions; subdivision statutes; soil and grade; availability of access to public roads.' water, and other utilities; consistency with local, state and regional growth management plans; availability of permits, government approvals, and licenses; and other Inspections that Buyer deems appropriate to determine the Property's suitability for the Buyer's intended use.

If the Property must be rezoned, Buyer will obtain the rezoning from the appropriate government agencies.  Seller will sign all documents Buyer is required to file in connection with development or rezoning approvals.

Seller gives Buyer, its agents, contractors and assigns, the right to enter the Property at any time during the Feasibility Study Period for the purpose of conducting Inspections; provided, however, that Buyer, its agents, contractors and assigns enter the Property and conduct Inspections at their own risk.

Buyer will indemnify and hold Seller harmless from losses, damages, costs, claims and expenses of any nature, including attorneys' fees, expenses and liability incurred in application for rezoning or related proceedings, and from liability to any person, arising from the conduct of any and all Inspections or any work authorized by Buyer.

Buyer will not engage in any activity that could result in a construction lien being filed against the Property without Seller’s prior written consent.

If this transaction does not close, Buyer will. at Buyer's expense, (1) repair all damages to the Property resulting from the Inspections and return the Property to the condition it was in prior to conduct of the Inspections, and (2) release to Seller all reports and other work generated as a result of the Inspections.

Buyer will deliver written notice to Seller prior to the expiration of the Feasibility Study Period of Buyer's determination of whether or not the Property is acceptable. Buyer's failure to comply with this notice requirement will constitute acceptance of the Property as. suitable for Buyer's intended use in its "as is" condition.

If the Property is unacceptable to Buyer and written notice of this fact is timely delivered to Seller, this Contract will be deemed terminated as of the day after the Feasibility Study period ends and Buyer's deposit(s) will be returned after Escrow Agent receives proper authorization from all interested parties.

Buy Now, Pay Later...Location, Location, Location

 

I strongly recommend that you secure the location for your new home now while lot prices are still depressed.  I am convinced ownership of a premium lot will be a good investment.  Its price will increase as the housing market begins to come out of its slump and inflation continues to erode the purchasing power of the dollar.

You can wait a while to hire a builder to build that house you love; but you can’t ask him to build  a lot.  One  near to where your family is living. Or an Intracoastal lot with the great view or that oversized lot with the big, mature trees.  Lota are all one-of-a kind!

Right now there are great locations available where the asking price is very low in comparison to the market prices of the surrounding homes.  But they are selling fast.  Builders keep a list of the best available lots and recommend them to prospective customers.  Investors are again hunting for property to flip. 

A lot on the market in Island Estates sold for $500,000 in 2009.  Now it has a Just Market Value of  $340,000.   One oversized, wooded lot in the desirable Lakes Section of Matanzas Woods was purchased for $46,500 in 2002.  I understand it sold last week for $10,000.

I received an article today about the increase in the use of Equity Loans…http://bit.ly/Vt0481.  Rubi Torres is Manager of the Palm Coast Branch of Hancock Bank.  She can help you determine the best way for you to obtain a loan to purchase a lot.

And Ted can help you find the perfect location for your second/retirement home and help you to buy it. 

Use Lesher for Lots!     Talk To Ted ! 

386-503-1101     tedleshersr@gmail.com

 

THRU GATE TURN RIGHT

Don't Get Lost... 

As usual, I held my Open House in Palm Coast Plantation this weekend.  But I had no visitors on Saturday and only one late Sunday.  She told me  the guard at the entrance gate was not giving out my Directions and Palm Coast Plantation Map as I requested. 

Instead, he told visitors who asked directions to my Open House to turn left and go to the Clubhouse where a real estate agent has an office provided by the Homeowner's Association.   

If you would like to see a beautiful Model Home, visit me on a Saturday or Sunday between 1:00 and 5:00.   

Request your Visitors Pass at the Gate House and turn RIGHT at the stop sign.  The model home is just down the street.
Talk To Ted ! 

Another Phoenix…Palm Coast Plantation

 

Wikipedia defines the Phoenix bird:

A phoenix depicted in a book of mythological creatures by F.J. Bertuch (1747-1822)

In Greek mythology, a phoenix or phenix (Ancient Greek φοίνιξ phóinīx) is a long-lived bird that is cyclically regenerated or reborn. Associated with the sun, a phoenix obtains new life by arising from the ashes of its predecessor. The phoenix was subsequently adopted as a symbol in Early Christianity. The phoenix is referenced in modern popular culture.

I recently went ‘all in’ with my real estate business and established an office in Palm Coast Plantation because I loved the place when it first opened, I mourned when they turned off the fountain and I thought it was going to go under, and I saw an opportunity when several builders started building on Heron Drive.

All those wonderful intracoastal lots waiting for smart folks with cash to snap them up at today’s bargain prices.  My agency had a listing for a Palm Coast Plantation intracoastal lot that expired last year.  It was listed for $165,000.  The owner paid $304,000 for it in 2009.  I called him about re-listing it.  He will talk to his financial advisor.  Thinks maybe he should keep paying the mortgage and taxes and hold on to it.  At the same time, there is a bank-owned lot on the intracoastal available for $119,900.

Palm Coast Plantation is just north of Grand Haven on Colbert.  It is a community of upscale homes, but not quite as upscale as Island Estates or Hammock Dunes.  They are mostly what I call “Personalized Homes”  Built by builders who take plans from houses they have built before, use them as a base, and then custom draw a new set of plans that incorporate the personal preferences of the customer.  They generally run from $100-$120 a square foot. 

 

 

 New builders are making plans to put up models and spec homes there as soon as they can get some money or credit.   “House/Lot” ads are beginning to spring up.  And “Talk To Ted” is learning everything there is to know about the new builders on the block here and in Palm Coast in general.  And learning that most of them are the old guys working under new brand names and company structures.  I am ready for the just started increase in the sale of new construction in Palm Coast in general and Palm Coast Plantation in Particular.  A local, knowledgeable Buyers Agent is waiting to hear from you! 

My office is in a beautiful, showcase home built by Florida Green Homes.  Health, Safety and Energy Savings are the hallmarks of a certified "Green" home.   I hold an open house there every Saturday and Sunday from 1-5.  It's located at 25 Emerald Lake Court.  Traffic is steadily increasing each weekend.  Find out more about Palm Coast Plantation.  Drop in or call me on 386-503-1101. 

Talk To Ted !

Not Staging is like Not Cutting Your Grass

 

If you are selling your home, nothing will help sell it faster that professionally presenting or “Staging” it.  Even if you need to rent a storage unit to put extra stuff in.  I read this article Trulia.com sent me and couldn’t help but think of all the ungroomed show dogs whose listings expired.  Next to overpricing it is a FISBO’s biggest mistake. 

Here are some quotes from “Staging Shockers: 9 of the Worst Staging Decisions Ever Made”.  The article is long, but interesting.  The comments are worth reading.  If you are planning to sell your home, read it and weep about how it really should look.  Here’s the link, hit your control button and click on it:

http://bit.ly/VhfhMT

And The Looting Begins…

Two of my relatives who live at the Jersey Shore reported to me today that daylight looting has begun.

The first report was about looters on bicycles with backpacks going into areas motor vehicles could not access and looting damaged houses.  Then my son, who lives at the shore, corroborated hearing about similar incidents. 

So far I am just hearing  ‘rumors of’...  but it seems logical.  There are those who want to accelerate the redistribution of income. 

 On Halloween kids went house-to-house in street clothes carrying bags and knocking on doors asking for handouts.  Now there are no doors.  Folks can just help themselves.

How can the homeowners defend against that?  They’re in gas lines trying to charge their cell phones.   

I understand why Palm Coast's gated communities are the first to begin to come out of this depressed housing market.  The days of unlocked doors and safe streets are over.

Talk To Ted if you are relocating to Florida! 

Explains the Differences But Not The Vitriol...Namaste'

n A. Byrne

Chairman & Editor-in-Chief at C-Change Media Inc.

Why Harvard MBAs Favor Obama Over One Of Their Own

October 31, 2012

 

Mitt Romney graduated from Harvard Business School in 1975 as a Baker Scholar, a distinction awarded to only the top students in every business class. By all accounts, he was the quintessential student, organizing an all-star study group of MBAs to prepare for Harvard’s case study classes.
Former classmates have described him as precise, convincing and charismatic. Not surprisingly, Romney has had a distinguished career in business with one of the most loyal recruiters of Harvard talent over the years.
But if you ask today's Harvard Business School students who they would vote for next week, Romney would lose in a landslide. Two surveys by The Harbus, the MBA student newspaper at Harvard, showed yesterday (Oct. 30), that Obama had the support of 65% of the students versus 32% for HBA alumnus Romney.
The lopsided result may seem surprising, especially because Romney used his MBA (he also graduated with a Harvard law degree as a dual-degree student) to carve out a highly successful career at Bain Capital, one of the most prestigious MBA employers on the planet. It's a path that many current Harvard MBAs would love to follow. The Harbus said the two latest surveys were completed by 668 students, more than a third of the MBA candidates on campus.
As Clark Peterson of The Harbus had pointed out in an earlier story, “Romney appears to be the ideal of what 85% of HBS students want to be—in private equity. Seriously though, the guy founded Bain Capital. Made a fortune in business. Managed high-profile projects like the Salt Lake City Winter Olympics. Raised a large, successful family. And he gives back to the community. God may have put Romney on Earth just to make HBS students feel downright inferior. What gives?”
Peterson, a second-year student himself who had been a legislative aide to conservative Sen. James Inhofe (R-OK), believes that “Barack Obama is just a damn likable fellow, particularly to younger voters like HBS students. He seems to get it. He seems to speak the same language. There’s a cultural and generational affinity.”
Then, there is the Republican brand, as Peterson put it. “The Republican brand is badly damaged among many voters whose preferences resemble our HBS sample: independent-minded, younger, upper-middle-class swing voters. To many of these voters, the GOP really puts the Old in Grand Old Party. It’s likely that this Party doesn’t like to party. And boy, the Republican Party is super white. There’s a cultural and generational gap.”
Indeed, the HBS vote could be little more than a reflection of the wide diversity of HBS students today, particularly compared to the 1970s when Romney strolled the campus and every member of his study group was a white male. Some 39% of the second-year MBAs at Harvard today are women, while 23% are U.S. ethnic minorities and 34% are international, representing 68 countries. It’s truly a melting pot.

Getting Personal, Here's Us

I just sent some shots of my family to a friend.  I don't know if I picked out the right ones, but I thought I would share it with my friends reading my blog.  4 Children, 8 Grandchildren 2 Great Grandchildren... Here's some.

LIVE, LAUGH and LEARN

I just watched a video by a control freak telling me why I will be happier if I allow myself to be vulnerable.  I highly recommend it for two reasons.  First, it made me laugh, and my most fun thing next to making someone else laugh is to laugh myself.  Second it taught me something.  Next to making people laugh learning stuff is what I like to do. 

I have a technique I use when I see that play button in the middle of an image…I slowly drag my curser to the bottom of the image and make the control bar pop up so I can see how long it is.  This said 20 minutes long and I almost canned it right there.  But for some reason I clicked the play button (I think because she looked kinda cute) and right away she made me laugh.  I watched all twenty minutes.  Although there were 45 seconds in the middle where I almost shut it off, (I think because I didn’t understand it) I watched the whole thing and learned why it is about the most popular of the very popular Ted talks.  (Not me Ted, him Ted.com).  Try it, I think you will like it.

http://www.ted.com/talks/brene_brown_on_vulnerability.html

PLAY THE HARP…Refinance your mortgage

Here is an article about the federal government’s program to help people refinance rather than default on their mortgages.  Try it, you’ll like  it…IF a strategic default is too scary for you.   It’s called the Home Affordable Refinance Program.

 

“Nearly 99,000 homeowners refinanced their mortgages in August through the Home Affordable Refinance Program (HARP), according to a new report released by the Federal Housing Finance Agency (FHFA) Tuesday.

The federal government’s HARP initiative, which is applicable for borrowers with loans owned by Fannie Mae or Freddie Mac, has put 618,217 homeowners into new mortgages with lower interest rates since the beginning of this year, when a broader group of borrowers were made eligible for the program.

According to FHFA, HARP is on target to reach a million borrowers in 2012. The agency attributes the continued
high volume of HARP refinances to record-low mortgage rates and program enhancements that included the elimination of its maximum loan-to-value (LTV) ratio limit.

Fannie Mae and Freddie Mac loans refinanced through HARP accounted for nearly one-quarter of all refinances in August, 24 percent to be exact. In states hard-hit by the housing downturn–-Nevada, Arizona, and Florida–-HARP refinances represented nearly half or more of total refis during the month.

HARP refinances for borrowers with LTV ratios greater than 105 percent accounted for more than 70 percent of HARP volume in Nevada, Arizona, and Florida and more than 60 percent of the HARP refinances in Idaho and California. Nationwide, LTV ratios above 105 percent characterized more than half of new HARP loans made in August.

FHFA also noted in its report that nearly 18 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages in August. By reducing their mortgage terms, these borrowers will be able to build equity faster.

Since the program’s inception in 2009, FHFA reports, Fannie Mae and Freddie Mac have financed more than 1.6 million loans through HARP.”

By Carrie Bay-dsnews.com

Another Incentive To Stop Paying Your Mortgage

I have written blog posts about “Strategic Default”.  Explained why I think it is not a moral transgression.  This article, summarized from a REO Institute article I found on ActiveRain.com, shows how banks are willing to help people stay in their homes…but only if you are 120 days or more late with your mortgage payments!

My Summary:

CitiMortgage to Launch Home Rental Program as Foreclosure Alternative

By: Tory Barringer

 CitiMortgage announced the launch of the Home Rental Program, a program designed to provide an alternative to foreclosure and allow eligible borrowers to stay in their homes.  The Home Rental Program will be managed by Carrington Capital Management, LLC and Carrington Mortgage Services, LLC. CitiMortgage and Carrington developed the program as a pilot.

 In order to be eligible for the program, candidates must: Occupy the property; owe more than their home is worth; be delinquent for 120 days; and be unable or ineligible to receive an affordable loan modification while still having the resources to make monthly rent payments.

 Candidates must have a loan in the pilot portfolio serviced by Carrington.  CitiMortgage has transferred the ownership of loans in its portfolio through the sale of $158 million in mortgages to the Carrington/Oaktree partnership.

 Under the program, the eligible borrower transfers ownership of the property to a vehicle established by Carrington Capital and its joint venture partner, Oaktree Capital Management, L.P. A lease will then be established for the property at a manageable monthly payment.

Lease payments will be determined by local market rates but are expected to be lower than the borrower’s mortgage obligation. Carrington will work with borrowers to establish a length for each lease.

The program will be tested in six of the hardest-hit markets to evaluate its effectiveness: Arizona, California, Texas, Florida, Nevada, and Georgia. Carrington will contact homeowners who meet eligibility requirements.

 

Want some help selling your house?   Talk To Ted!

 

Why Get A Mortgage Even If You Have The Cash

Two of my sons just bought our house and gave us a Life Estate.  Even though they could pay cash, I urged them to borrow the money from the bank.  I want them to take out a mortgage on the house. 

I gave them two good reasons to do this.  First, mortgage loan rates are at an all-time low.  They almost for sure can invest their cash and make more in a stock market fund than they will be paying for the next thirty years for the interest on the borrowed money. 

Second, they will be paying off the mortgage in cheaper dollars because of inflation and the reduced value of the dollar.  This is, in my mind, a sure thing-according to past history (what I could buy with a dollar in 1942 when I was a kid) and to the amount of borrowing and printing of money our government has done recently.

This second point, paying a mortgage off using devalued currency, was harder to get across to them.  Today I received an email from Bank of America that gave a great explanation.  I have changed it a bit to make it even clearer:


How to Explain the Impact of Inflation

Imagine for a moment that you are going to lend your own money to someone to buy a house. You determine this person is a good credit risk, you process the loan, and you start receiving $1,500 per month as your regular payment. You then of course take that $1,500 and start loading up your shopping cart with the goods and services you need on a monthly basis(food, clothing, medicine, gas, and so on).

But over time, you notice something happening.

Every month, you are getting slightly less in your cart than you did the month before for that same $1,500 you are spending. Why? Because costs are on the rise. That's inflation.

Why Interest Rates Go Up when there is fear of inflation in the air.

Imagine that you are once again going to lend your very own money to another person to buy a house. You want the same shopping cart full of goods that you got last time in return for doing the loan, but this time you realize that you can no longer get that same cart full with $1,500. Due to inflation, you now need $1,700 to buy those same goods and services.

As a result, you will charge a higher interest rate to compensate you for the ongoing impact of inflation.” 

Your dollars will be worth less in the future than they are now…

Thank you Bank of America.  That makes it plain to see why my kids should use a home mortgage now and put their cash into “inflation proof” investments. 

 But you must invest your cash!  Do not spend it.  If you do, as inflation takes place you will become very, very poor.

Another major benefit to my kids is that we sold the house to them for a very low price and it is worth more than that.  We worked out a great deal with the bank to pay off our existing loan (for much  less than we owed) with the kid's money and gave them the deed.  Much better than leaving the house to them as part of our will with all the costs, risks and sibling conflicts that can cause. 

We simply (and inexpensively) gave them a Quit Claim deed.  They sent the payoff money to the bank.  We gave them the deed.  The deed we gave them gave us a Life Estate.  Thank You, Lord!

Want to know more about how to invest in today’s bargain real estate market?  Talk To Ted!  I am an experienced and knowledgeable Buyer’s Agent.

Backyards are highly overrated

This article in USA today made me think.  I love to sit out in my screened-in lanai (porch), watch the birds use the bird bath and squawk at each other; admire the flowers and trees; glance over at the seldom used barbeque and thank the Lord for all my blessings.  But I don’t like mosquito bites, the hot Florida sun on my bald head, or standing up and moving around too much.  Makes me sweat.  So I think there is some wisdom in what is said here.  I would give up our big yard for more storage space and a larger office.  Read and ponder:

WASHINGTON – Oct. 8, 2012 – After a dreary few years, the housing market is showing signs of life. A mid-September report from the National Association of Realtors found that home resales rose 7.8% in August from a year before. New housing starts are up, too, which has people thinking about what kind of space they’d like to live in. One major focus of this question? The great outdoors.

According to a survey by the American Institute of Architects (AIA), 64% of architecture firms are reporting increased interest in outdoor living spaces: places for adults to relax; places for the kids to play. People want “a luxurious outdoor world, to get away from their everyday lives at home instead of having to go somewhere,” says Janet Bloomberg, with KUBE Architecture.

There’s just one problem: Evidence shows that for all we lust after outdoor sanctuaries, such retreats have little to do with the lives we actually live. Neither adults nor children spend much leisure time outdoors, and in making the trade-offs to have private outdoor space, we could be making ourselves less happy overall.

Mistaken impression

Anyone who studies how Americans spend their time eventually comes to a stark conclusion: Impressions and reality differ a great deal. A fascinating book published this summer, which came to a similar discovery, was Life at Home in the Twenty-First Century, the result of an anthropological study of middle-class Los Angeles families. Researchers from UCLA’s Center on Everyday Lives of Families recorded hours of footage, documented possessions, and clocked how people spent their days to the minute.

Few of those minutes turn out to be spent outside.

Children averaged fewer than 40 minutes per week in their yards. Adults spent less than 15 minutes of time per week in their yards. These families had sunny Southern California weather. They had nice porch furniture, trampolines, even pools. They just didn’t use them. Many families told researchers that they used their backyards all the time, but then were rarely observed out there in this multiyear study.

The great indoors

Jeanne Arnold, one of the lead researchers, pinpoints two main culprits: first, general busy schedules (work, school, activities); but second, the prevalence of media options, which “seem like magnets, whether it’s television or computers or video game consoles.” Rather than use their outdoor retreats, people would retreat by turning on a screen. People don’t like this image of their lives. So they don’t acknowledge it -- to researchers, or with their budgets.

“They’re willing to spend to sort of perpetuate that illusion,” says Arnold. By having nice yards, pools and decks, they could “attempt to project something that’s not necessarily going on, but is clearly ideal” -- a family that spends time together outside.

All this would be humorous, except that yards come with externalities. A family moves to the exurbs for a private patch of green. But to buy less than six minutes a day of play and 2 minutes of adult leisure, the parents pay with increased commutes. The Census reports that the average commute is about 50 minutes a day, and battling traffic seldom makes people happy. One 2004 study in Science of Texas working women found that commuting ranked at the absolute bottom of the happiness scale on any given day.

To be sure, even if a backyard isn’t used, it can still bring happiness. Leonard Kady, chairman of the AIA’s Small Project Practitioners group, notes that “you’re always looking into the space.”

But the broader point is that, while a private, beautiful yard seems part of the American dream, Americans spend little time using those yards we pay dearly to get and upgrade. If the kids are just going to play Nintendo, or you’re just going to watch TV, better to live close to work, even if there’s no yard, so you can be home more to enjoy the screens.

© Copyright 2012 USA TODAY, a division of Gannett Co. Inc., Laura Vanderkam. The author of “What the Most Successful People Do Before Breakfast,” Vanderkam is a member of USA TODAY’s board of contributors.

 

Are Strategic Mortgage Defaults Immoral?

Apparently Donald Trump and lots of other Americans do not think so.  The Donald defaults as a business strategy and it works just fine (Google 'Donald Trump Bankruptcies' for lots of info on this.)  And lots of folks are agreeing with him that a mortgage is a contract with a business; not with God.  You agreed to give them the house if you did not make your payments.  So here, take the house...

This article reports on how fast this trend is growing:

Survey: 32% Of Americans Justify Strategic Default

The housing crises seems to have led Americans to take a less critical view of strategic default.

According to a recent survey that polled 1,026 U.S. adults, 32 percent stated they believe homeowners should be able to strategically default without facing consequences. The online survey was conducted by JZ Analytics on behalf of ID Analytics.

ID Analytics also reported 13 percent of the surveyed Americans said they are likely to strategically default on a mortgage, and 17 percent said they know someone who has strategically defaulted.

The statistics were revealed Wednesday at ID Analytics’ Advance 2012 conference.
John Zogby, senior analyst at JZ Analytics and creator of the Zogby Poll, presented the results at the event.

“Our research into the consumer opinion of the economic crisis of 2008 found alarming results,” Zogby said. “What jumped out is how many Americans feel it is acceptable for homeowners to walk away from a mortgage and go into foreclosure. If Americans carry on with that mindset, it will continue to cause problems as the economy undergoes a slow recovery.”

Some of the survey respondents justified their position on strategic default because they believe the “mortgage market has been a scam for many years, built on false promises that took advantage of people that didn’t understand what was happening,” according to a release.

Low credit scores don’t appear to bother people very much as well, with 36 percent of those surveyed stating they believe it’s socially acceptable to have a poor credit score.

In addition to those findings, 17 percent said they would exaggerate personal information to obtain credit