Tall grass at these abandoned homes is creating eyesores and attracting bugs and snakes. Though some HOAs are cutting the grass, cities have begun sending their own workers out with lawn mowers.
Dec 15, 2008
A Glut Of Abandoned Homes
According to the Orlando Sentinel, cities already strapped for cash face a new burden: keeping homes in foreclosure from dragging down property values of neighboring homes.
Dec 11, 2008
Small & Affordable Ways To Invest In Your Home
There are many small and affordable ways to invest in your home today. These projects are small investments of time and money you can make in your home - one project at a time. Not only will you enjoy these improvements, but they will also be strong selling features if and when you decide to sell your home.
These improvements are in demand by buyers today:
- Storage
- Ceiling Fans
- Light Fixtures
- Window Coverings
- Appliances
- Paint
- Faucets
- Hardware
These improvements are in demand by buyers today:
- Storage
- Ceiling Fans
- Light Fixtures
- Window Coverings
- Appliances
- Paint
- Faucets
- Hardware
Dec 9, 2008
1031 Exchange
Property owners considering “selling” their investment property may want to consider “trading” it in a 1031 exchange.
What Is It? In a 1031 exchange, a property owner “trades” a relinquished property for a “like-kind” replacement property while deferring the payment of federal income tax and some state tax on the transaction.
A 1031 exchange is tax-deferred - not tax-free. When a replacement property is ultimately sold (not as part of another exchange), the original deferred gain plus any additional gain realized since the purchase of a replacement property is subject to tax.
Like-Kind Property All real property is considered “like-kind” with other real property of the same nature and quality. Both a relinquished and a replacement property in a 1031 exchange must be held for investment purposes or for productive use in a business. A primary residence, second home or vacation home does not qualify for a 1031 exchange.
Some examples of qualified like-kind real property include:
- rental property
- office suite
- retail space
- vacant land
Benefits Some of the benefits of a 1031 exchange include:
- Postpone or potentially eliminate tax due on any gain in the sale of qualifying investment property.
- Acquire and dispose of property to reallocate your investment portfolio without paying tax on any gain.
- More money available to invest in another investment property. In effect, you receive an interest-free loan from the federal government in the amount you would have paid in tax on any gain.
Qualified Intermediary A Qualified Intermediary (QI) - an independent party who facilitates the exchange - is required to transact a 1031 exchange. The exchange ends the moment the taxpayer has actual or constructive receipt of sale proceeds of a relinquished property. The QI holds all sale proceeds until funds are needed to acquire a replacement property. The QI then delivers the funds directly to the closing agent.
What Is It? In a 1031 exchange, a property owner “trades” a relinquished property for a “like-kind” replacement property while deferring the payment of federal income tax and some state tax on the transaction.
A 1031 exchange is tax-deferred - not tax-free. When a replacement property is ultimately sold (not as part of another exchange), the original deferred gain plus any additional gain realized since the purchase of a replacement property is subject to tax.
Like-Kind Property All real property is considered “like-kind” with other real property of the same nature and quality. Both a relinquished and a replacement property in a 1031 exchange must be held for investment purposes or for productive use in a business. A primary residence, second home or vacation home does not qualify for a 1031 exchange.
Some examples of qualified like-kind real property include:
- rental property
- office suite
- retail space
- vacant land
Benefits Some of the benefits of a 1031 exchange include:
- Postpone or potentially eliminate tax due on any gain in the sale of qualifying investment property.
- Acquire and dispose of property to reallocate your investment portfolio without paying tax on any gain.
- More money available to invest in another investment property. In effect, you receive an interest-free loan from the federal government in the amount you would have paid in tax on any gain.
Qualified Intermediary A Qualified Intermediary (QI) - an independent party who facilitates the exchange - is required to transact a 1031 exchange. The exchange ends the moment the taxpayer has actual or constructive receipt of sale proceeds of a relinquished property. The QI holds all sale proceeds until funds are needed to acquire a replacement property. The QI then delivers the funds directly to the closing agent.
Dec 5, 2008
All About Co-Ownership
When two or more people own an interest in property, they are considered concurrent owners. The amount of control a co-owner has in their property is affected by how they hold ownership to the property. Varying forms of ownership dictate whether or not a co-owner can give their property away or how a co-owner’s interest passes to their estate or heirs upon their death.
The three forms of co-ownership are:
Tenancy In Common This form of ownership is the most commonly used form of co-ownership behind husband-and-wife ownership. Any number of people may own property together as tenants in common. Tenants in common may have acquired title at the same time or different times. Tenants in common may hold different percentages of ownership in the property. Each owner has an undivided interest in the property (an interest in the entire property, not just one particular party of the property). A tenant in common’s interest may be transferred or inherited, in which case the heir becomes a new tenant in common with the other co-owners.
Joint Tenancy This form of ownership is characterized by the right of survivorship. Joint tenants acquire title at the same time. Joint tenants hold an equal percentage of ownership in the property. Joint tenants have an undivided interest in the property (an interest in the entire property, not just one particular party of the property). When one co-owner dies, their share of the property goes to the surviving co-owner – not the heirs of the deceased.
The three forms of co-ownership are:
Tenancy In Common This form of ownership is the most commonly used form of co-ownership behind husband-and-wife ownership. Any number of people may own property together as tenants in common. Tenants in common may have acquired title at the same time or different times. Tenants in common may hold different percentages of ownership in the property. Each owner has an undivided interest in the property (an interest in the entire property, not just one particular party of the property). A tenant in common’s interest may be transferred or inherited, in which case the heir becomes a new tenant in common with the other co-owners.
Joint Tenancy This form of ownership is characterized by the right of survivorship. Joint tenants acquire title at the same time. Joint tenants hold an equal percentage of ownership in the property. Joint tenants have an undivided interest in the property (an interest in the entire property, not just one particular party of the property). When one co-owner dies, their share of the property goes to the surviving co-owner – not the heirs of the deceased.
Tenancy By The Entireties This form of ownership is basically a joint tenancy between husband and wife. When one spouse dies, their interest automatically transfers to the surviving spouse. Neither spouse can will any portion of their interest; however, this form of ownership can be divided by annulment or divorce.
Dec 2, 2008
The Realtor Difference: Time, Energy, Effort
Your time is valuable. Selling a home takes an extraordinary amount of time, energy and effort. A majority of homeowners cannot give the necessary time, energy and effort needed to sell their own home for maximum dollars in minimum time with minimum hassle. This is another key area where the value of a realtor is keenly apparent. It is a realtor’s job to spend their time, energy and effort to actively market your home and seek a buyer who is ready, willing and able to buy your home. A realtor is uniquely motivated to get your home sold because a realtor only gets paid at the closing table.
Nov 28, 2008
Why Strong MLS Photos Are Critical
Photos of your home in MLS are often your first and only chance to make a good impression and to pique a buyer’s interest enough for them to request a showing of your home. After price and location, the average buyer will select homes for viewing based on presentation and image in MLS photos.
Even today, I routinely see the poorest of poor photos of homes in MLS. I shake my head at the laughable, embarrassingly bad photos of homes and wonder why any homeowner would accept this. Are they aware what a poor first impression their home is giving out? Are they wondering why they’ve received so few showings? Are they questioning why their home has been on the market for eight months?
Every quick, top dollar home sale starts with strong, effective MLS photos. You’ve heard “image is everything” and in real estate, it is. Poor, unflattering or non-existent photos are a sure path to minimal showings, lengthy time on market and a drawn out sale.
Quality Every one of your MLS photos must showcase your home to its fullest and provide strong visual appeal to a buyer. Strong photos cut through the avalanche of available homes to connect with a buyer in capturing their attention and interest. This is your first tool you have against your competition. This could make the difference in a buyer viewing your home this weekend versus the 13 other homes on the market in your neighborhood.
The time of year, the time of the day and the weather all affect the image of your home in MLS photos. Photos taken during a summer dry spell show your home with brown, crispy grass and landscaping. Photos taken at the height of daylight (12pm) cast a severe, dark shadow over your home. Photos taken on an overcast day show your home as lifeless and dull. Ask your agent to take updated or improved photos if need be.
Quantity Orlando MLS allows a maximum of ten photos. Even today, I routinely see homes with just a couple photos - and far too many homes with only one photo. This is doing a disservice to the homeowner and a potential buyer. Insist that your agent post the maximum number of MLS photos allowed.
Even today, I routinely see the poorest of poor photos of homes in MLS. I shake my head at the laughable, embarrassingly bad photos of homes and wonder why any homeowner would accept this. Are they aware what a poor first impression their home is giving out? Are they wondering why they’ve received so few showings? Are they questioning why their home has been on the market for eight months?
Every quick, top dollar home sale starts with strong, effective MLS photos. You’ve heard “image is everything” and in real estate, it is. Poor, unflattering or non-existent photos are a sure path to minimal showings, lengthy time on market and a drawn out sale.
Quality Every one of your MLS photos must showcase your home to its fullest and provide strong visual appeal to a buyer. Strong photos cut through the avalanche of available homes to connect with a buyer in capturing their attention and interest. This is your first tool you have against your competition. This could make the difference in a buyer viewing your home this weekend versus the 13 other homes on the market in your neighborhood.
The time of year, the time of the day and the weather all affect the image of your home in MLS photos. Photos taken during a summer dry spell show your home with brown, crispy grass and landscaping. Photos taken at the height of daylight (12pm) cast a severe, dark shadow over your home. Photos taken on an overcast day show your home as lifeless and dull. Ask your agent to take updated or improved photos if need be.
Quantity Orlando MLS allows a maximum of ten photos. Even today, I routinely see homes with just a couple photos - and far too many homes with only one photo. This is doing a disservice to the homeowner and a potential buyer. Insist that your agent post the maximum number of MLS photos allowed.
Nov 25, 2008
What Are Doc Stamps?
Doc stamps are excise taxes imposed by Florida law on the transfer of ownership or interest in a real estate transaction. Doc stamps are one of the most expensive closing cost items for both a buyer and a seller. Doc stamps are paid one time at the time of closing and can be seen on lines 1200 to 1206 of the closing statement (also known as “the HUD”).
The rates for doc stamps are as follows:
- Deed $0.70 per $100 of purchase price; customarily paid by seller
- Mortgage $0.35 per $100 of mortgage; customarily paid by buyer
- Intangible Tax $0.002 per $1 of mortgage; customarily paid by buyer
Example: $400,000 purchase price; $300,000 mortgage
- Deed $400,000 / $100 = 4,000 taxable increments x $0.70 = $2,800 customarily paid by seller
- Mortgage $300,000 / $100 = 3,000 taxable increments x $.035 = $1,050 customarily paid by buyer
- Intangible Tax $300,000 x $0.002 = $600 customarily paid by buyer
The rates for doc stamps are as follows:
- Deed $0.70 per $100 of purchase price; customarily paid by seller
- Mortgage $0.35 per $100 of mortgage; customarily paid by buyer
- Intangible Tax $0.002 per $1 of mortgage; customarily paid by buyer
Example: $400,000 purchase price; $300,000 mortgage
- Deed $400,000 / $100 = 4,000 taxable increments x $0.70 = $2,800 customarily paid by seller
- Mortgage $300,000 / $100 = 3,000 taxable increments x $.035 = $1,050 customarily paid by buyer
- Intangible Tax $300,000 x $0.002 = $600 customarily paid by buyer
Nov 21, 2008
They Want Our Chandelier, Too?
A showing wrapped up at your home today at noon. By early evening, you hear word from your agent that the buyer is very interested in your home and is planning a second showing with their agent for this weekend.
As the seller, you have informed your agent that your $6,000 chandelier in the foyer “does not convey” (is not included in the sale of the home). This is disclosed in the home’s MLS listing for any potential buyer and their agent to see.
The second showing is a hit and by late Mon morning, you have an offer in hand. The terms of the offer are right in line with your expectations and you intend to accept as is – but wait, the buyer wants your $6,000 chandelier in the foyer - the chandelier you planned to move to your new home. Now what?
Sellers, be prepared. In the buyer’s market we have today in east metro Orlando, buyers are commonly asking for – and getting - anything they desire from furniture and fixtures to closing costs and HOA dues.
Sellers, keep in mind the definition of a fixture versus personal property when it comes to the sale of your home:
Fixture A fixture is an object that is permanently attached to a home. Some examples include a bathtub, fence, fireplace and French doors – these items cannot be easily removed from a home without causing damage.
Personal Property Personal property is an object that is not permanently attached to a home. Some examples include a chandelier, artwork, furniture and window coverings – these items can be easily removed from a home and packed away.
In the case of the $6,000 chandelier that the seller intended to move to their new home, the best practice would have been to remove it and replace it with a nice, but not expensive alternative before putting the home on the market. That way, no buyer would have ever laid eyes on the $6,000 chandelier and therefore, would never have the opportunity to stake a claim for it…in other words, don’t let a buyer fall in love with something they can’t have.
As the seller, you have informed your agent that your $6,000 chandelier in the foyer “does not convey” (is not included in the sale of the home). This is disclosed in the home’s MLS listing for any potential buyer and their agent to see.
The second showing is a hit and by late Mon morning, you have an offer in hand. The terms of the offer are right in line with your expectations and you intend to accept as is – but wait, the buyer wants your $6,000 chandelier in the foyer - the chandelier you planned to move to your new home. Now what?
Sellers, be prepared. In the buyer’s market we have today in east metro Orlando, buyers are commonly asking for – and getting - anything they desire from furniture and fixtures to closing costs and HOA dues.
Sellers, keep in mind the definition of a fixture versus personal property when it comes to the sale of your home:
Fixture A fixture is an object that is permanently attached to a home. Some examples include a bathtub, fence, fireplace and French doors – these items cannot be easily removed from a home without causing damage.
Personal Property Personal property is an object that is not permanently attached to a home. Some examples include a chandelier, artwork, furniture and window coverings – these items can be easily removed from a home and packed away.
In the case of the $6,000 chandelier that the seller intended to move to their new home, the best practice would have been to remove it and replace it with a nice, but not expensive alternative before putting the home on the market. That way, no buyer would have ever laid eyes on the $6,000 chandelier and therefore, would never have the opportunity to stake a claim for it…in other words, don’t let a buyer fall in love with something they can’t have.
Nov 18, 2008
Have You Overimproved Your Home?
Just a few years ago, home improvements were considered strong, sound investments. A $50,000 kitchen remodel could easily add $75,000 to the value of a home. However, in the challenging real estate market we are experiencing today, this is no longer the case.
For a homeowner who needs or wants to sell in the near-term with recent major home improvements in place, it is possible for them to find that they have actually overimproved their home and may be unable to recoup their costs in the sale of their home.
Materials & Finishes Luxury, top-of-the-line materials and finishes used in home improvement projects during the past few years were in high demand by buyers who were willing and able to pay the price. This is no longer the case as more buyers select homes with quality, but not over-the-top materials and finishes.
Additions Home improvements that are inconsistent with other homes in the neighborhood are considered an overimprovement. For example, the addition of a $50,000 swimming pool to a $300,000 home in a neighborhood of $300,000 homes would be considered an overimprovement.
Home improvements that are relative to other homes in the neighborhood are still considered safe, but be watchful of overimproving your home beyond the general value of your neighborhood such as adding a third bath if all other homes have two baths.
Appreciation Being the most expensive house on the block is considered an overimprovement. For example, the owner of a $400,000 home in a neighborhood of $250,000 homes will see the value of their home hindered by the more affordable homes. The $400,000 home in the $250,000 neighborhood will appreciate at the same 5% per year like every other home in the neighborhood though a nearby $400,000 neighborhood may be appreciating at 8% per year.
For a homeowner who needs or wants to sell in the near-term with recent major home improvements in place, it is possible for them to find that they have actually overimproved their home and may be unable to recoup their costs in the sale of their home.
Materials & Finishes Luxury, top-of-the-line materials and finishes used in home improvement projects during the past few years were in high demand by buyers who were willing and able to pay the price. This is no longer the case as more buyers select homes with quality, but not over-the-top materials and finishes.
Additions Home improvements that are inconsistent with other homes in the neighborhood are considered an overimprovement. For example, the addition of a $50,000 swimming pool to a $300,000 home in a neighborhood of $300,000 homes would be considered an overimprovement.
Home improvements that are relative to other homes in the neighborhood are still considered safe, but be watchful of overimproving your home beyond the general value of your neighborhood such as adding a third bath if all other homes have two baths.
Appreciation Being the most expensive house on the block is considered an overimprovement. For example, the owner of a $400,000 home in a neighborhood of $250,000 homes will see the value of their home hindered by the more affordable homes. The $400,000 home in the $250,000 neighborhood will appreciate at the same 5% per year like every other home in the neighborhood though a nearby $400,000 neighborhood may be appreciating at 8% per year.
Nov 11, 2008
All About Deeds
With a sharp increase in short sale, foreclosure and bank-owned property sales today, the transfer of title (ownership) in real estate from seller to buyer is less likely to be conveyed through the traditional Warranty deed and more likely to be conveyed through one of three other types of statutory deeds.
In the transfer of ownership from seller to buyer, there are varying levels of protection among the four types of statutory deeds. Starting with the deed that offers the most covenants and warranties and ending with the deed that offers the fewest covenants and warranties, the four types of statutory deeds are:
Warranty The seller forever covenants and warrants the title and provides every possible future guarantee to protect the buyer’s title. With a warranty deed, the seller is the rightful owner and has the right to transfer title; there are no outstanding claims on the property from lenders or other creditors using the property as collateral; and the property cannot be claimed by another party. This type of deed is commonly used in a traditional arms-length transaction between Joe Seller and Joe Buyer.
Bargain & Sale The seller does not covenant or warrant to defend the title against any future claim or attack. This type of deed is sufficient to convey all the title the seller has, but does little to protect the buyer from clouds or claims on the title. This type of deed is commonly used by court officials for property that has been seized from the property owner and held by force of law by the authorities.
Special Warranty The seller does not covenant or warrant the title in any manner except against acts by the seller or the seller’s rep. The seller guarantees that nothing has been done to encumber or cloud the title during their ownership. This type of deed is commonly used by major corporations in the sale of property.
Quitclaim The seller makes no covenants or warranties about the quality or extent of the title being conveyed. The seller does not warrant to defend the title or to transfer a valid interest. The buyer has no legal recourse if title problems surface at a later date or if a forgotten lien holder emerges from the woodwork. This type of deed is commonly used when a property owner dies and bequeaths their property to someone; when a property owner gets married/divorced and adds/removes the spouse's name to/from the title; or when property is transferred to a living trust.
In the transfer of ownership from seller to buyer, there are varying levels of protection among the four types of statutory deeds. Starting with the deed that offers the most covenants and warranties and ending with the deed that offers the fewest covenants and warranties, the four types of statutory deeds are:
Warranty The seller forever covenants and warrants the title and provides every possible future guarantee to protect the buyer’s title. With a warranty deed, the seller is the rightful owner and has the right to transfer title; there are no outstanding claims on the property from lenders or other creditors using the property as collateral; and the property cannot be claimed by another party. This type of deed is commonly used in a traditional arms-length transaction between Joe Seller and Joe Buyer.
Bargain & Sale The seller does not covenant or warrant to defend the title against any future claim or attack. This type of deed is sufficient to convey all the title the seller has, but does little to protect the buyer from clouds or claims on the title. This type of deed is commonly used by court officials for property that has been seized from the property owner and held by force of law by the authorities.
Special Warranty The seller does not covenant or warrant the title in any manner except against acts by the seller or the seller’s rep. The seller guarantees that nothing has been done to encumber or cloud the title during their ownership. This type of deed is commonly used by major corporations in the sale of property.
Quitclaim The seller makes no covenants or warranties about the quality or extent of the title being conveyed. The seller does not warrant to defend the title or to transfer a valid interest. The buyer has no legal recourse if title problems surface at a later date or if a forgotten lien holder emerges from the woodwork. This type of deed is commonly used when a property owner dies and bequeaths their property to someone; when a property owner gets married/divorced and adds/removes the spouse's name to/from the title; or when property is transferred to a living trust.
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