Orlando Real Estate Voice

Heated pools, ocean views and media rooms are not what most people would expect to find in a foreclosed property, but more high-end homes – priced at more than a million dollars – have been falling into the hands of banks this year.

Foreclosures of homes worth more than $1 million began increasing at the end of 2009, according to data provided to CNBC.com by foreclosure tracking website RealtyTrac.

Foreclosures reached a high in February 2010, the last month data were available, when 4,169 high-end homes were somewhere in the foreclosure process; having received a foreclosure notice, had an auction scheduled or had ownership taken over by the lender. That’s a 121 percent increase from a year ago.

The deterioration comes just as housing experts say that foreclosures in the low and middle ends of the housing market are showing signs of stabilization.

Owners of expensive homes “were able to stave off foreclosure longer,” says independent real estate analyst Jack McCabe, CEO of McCabe Research and Consulting in South Florida. “Lower-end homeowners were the first ones to see the escalating foreclosures, because they generally do not have the cash reserves or credit available that the luxury homeowners do. They had the ability to take their credit cards and pull out thousands of dollars, while the lower-end buyers were already tapped out.”

McCabe expects foreclosures in the high-end market will increase into 2011.

Though the RealtyTrac data on high-end homes are not available on a regional or metropolitan basis, anecdotal evidence indicates the problem is cropping up across the country. High-end and luxury categories vary widely from market to market. In some suburban areas, in the Northeast and California, for instance, million-dollar homes are fairly common; but nationwide, they represent 1.1 percent of overall housing stock.

“We have seen an increase, in the million-plus range, of the number of foreclosures and short sales in the greater Chicago area,” says Jim Kinney, vice president of luxury home sales at Baird & Warner.

He says that of the 295 million-dollar, single-family properties sold in the first quarter this year, 37 were either a foreclosure or short sale, when a bank and homeowner agree to sell the home for less than the loan is worth. During the same period a year ago, 10 of 231 fell into those categories.

In the Fort Myers, Fla., area, Mike McMurray of McMurray and Nette and the VIP Realty Group says he has seen a few foreclosed high-end homes on the market compared with none last year. He’s currently showing a 4,800-square-foot, $3.65 million home on Captiva Island, where foreclosures are usually rare. The bank-owned home has five bedrooms and access to 150 feet of Gulf Coast beachfront.

“There are more we see coming down the pipeline,” McMurray says.

Data show that may be the case around the country. The 90-day delinquency rate on home loans worth more than a million dollars hit a high in February at 13.3 percent, above the overall rate of 8.6 percent, according to real estate data firm First American CoreLogic. Foreclosure proceedings generally start after a homeowner has been at least 90 days late on a mortgage payment, experts say.

One difference in the high-end market is that lenders are willing to do more to head off foreclosure by renegotiating the loan or accepting a short-sale transaction, which is essentially a last-ditch effort.

Lenders are far more likely to go the short-sale route. There’s a lot more money at stake, and maintenance can be high if a foreclosure just sits there.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://OrlandoShortSaleExpert.com or www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange or Osceola County Florida and Orlando, Windermere, Winter Garden, Kissimmee, Winter Park, Altamonte Springs, Maitland, Lake Mary, Oviedo or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.

1. The bank is going to what to see your entire financial picture. This means you will need to provide copy of back taxes, paycheck stubs, bank statements, personal financial statement, etc. They will want to know what all your assets are.
2. The bank may want you to sign a promissory note for the difference, now it will most probably be at a hugely reduced amount and may include monthly payments.
3. When the bank gives the final approval of the short sale, they may request that the escrow close in as little as 30 days, sometimes sooner.
4. As the seller, you can not receive any proceeds from the sale. Period.
5. Your Real Estate agents, and Title company, may have to work for reduced fees.
6. The banks are incredibly overwhelmed with short sales and many times a decision can take upwards of 90 days; however, recently the approval process has been streamlined at many lenders.
7. Your property may be foreclosed on during the short sale process because the bank can not process the short sale in time; however, if you have a strong agent they should be able to get the foreclosure postponed give me a call to help postpone any foreclosure dates.
8. Do not expect to receive any information on a regular basis. There may be weeks that go by with no news from the lender. This is perfectly normal.
9. The bank will want to get a BPO (broker price opinion) and/or an appraisal of your house.
10. Be patient. This is the best policy. Try to avoid being stressed out over something that you can not control. If you have a well trained agent, you are in good hands.

If you have any questions, please don’t hesitate to contact me.

***************************************************************************************

Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange County Florida and Orlando, Windermere, Winter Garden, or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.

Included in H.R. 3221, the Housing and Economic Recovery Act of 2008, were numerous additions, and amendments to real estate tax rules.  Below is a brief summary of the tax provisions that were part of H.R. 3221.

Low-Income Housing Tax Credit

• Temporarily increases the volume cap for low-income housing tax credits for 2008 and 2009.

Homebuyer Tax Credit

• The tax credit only applies to first time homebuyers.  A first time homebuyer is defined as a homeowner who has no present ownership in a principle residence or has not had ownership of a principle residence for at least 3-years.
• The tax credit is 10% of the purchase price, capped at $7,500.  The tax credit is reduced when the buyers adjusted gross income (AGI) is over $75,000 ($150,000 married filing jointly).  The amount is reduced by the amount over the allowed AGI divided by $20,000.
• The tax credit does need to be repaid, therefore working more as an interest free loan than a true tax credit.  The credit is repaid out of your taxes over 15-years, or a rate of 6.66% of the credit per year. If the home is sold before the credit is paid back, payments are accelerated in the following taxable years by the amount still owed on repayment over the original amount of the credit.  However, if your gain on the house does not exceed the amount still owed at the time of sale, you will not owe any more repayment on the credit. 
• The home must be purchased between April 8, 2008 and June 30, 2009. The purchase must be of an owner occupied primary residence.
• You cannot get the credit is the property is purchased from a relative, the purchase is financed by a tax exempt qualified mortgage issue/bond, the taxpayer is a nonresident alien, or if the taxpayer disposes of the residence before the close of the taxable year.

Standard Deduction for Property Taxes

• Creation of a new standard deduction for property taxes by nonitemizers in the amount of the taxes, capped at $500 ($1000 for joint filer).

FIRPTA FIX

• Modifies FIRPTA to allow the documents to be given to a qualified substitute instead of the buyer.

Second Home Conversion Tax Offset

• One of the offsets included in H.R. 3221 was the closing of a tax loophole concerning the conversion of a second home to a primary residence and the capital gains exclusion.  This offset ONLY applies when a second home is converted to a primary residence and does not affect the capital gains exclusion when a home has only been a primary residence.
• The loophole allowed it so that if a second home was converted to a primary residence and was used as such for at least two out of the previous five years; the homeowner could use the $250,000/$500,000 capital gains exclusion. 
• H.R. 3221 closes that loophole and will now only allow the capital gains exclusion to apply to gain received once the house became a primary residence
• Any gain earned prior to January 1, 2009 would be affected by this provision and there are some exclusions of this policy for extended military service (with limitations) as well as change of employment, health conditions or other unforeseen circumstances (not to exceed an aggregate period of two years). 
• There is also an allowance of 5-years of gain if a property is converted from a principle residence to a second home.
• The new formula to calculate the gain allowed to be included in the capital gains exclusion would be: Profit from the sale multiplied by the number of days the home was a primary residence over the number of days the home was owned.

Anyone looking to buy a home in Orlando, East Orlando or any of the surrounding communities such as Windermere, Winter Garden, Ocoee, Winter Park, Kissimmee, Saint CLoud, or Lake Nona please give me a call because I have some terrific deals. I found this photos recently and I Love it. So, the answer is NO it’s not real and don’t ask where you can find it. 

However, I’m seeing short sales and foreclosures right now that are 1/2 price compared to only 3 years ago.  I’m hearing people saying that we are not at the bottom and they’re going to wait. Well, very simply if you wait for another $10,000 – $20,000 break in price your thinking is wrong. Let me tell you why.

  Interest rates is the answer.  Interest rates will rise and trying to save $10-$20 thousand will be nothing compared to a 1/2 point to a point higher in interest rates. Do the math. When you’re done doing the math, give me a call and I’ll find you that perfect home at a huge price reduction at the lowest interest rate. Don’t wait for the media to say it’s turning around, because by then it’ll be too late and you’ve missed the bottom. So CALL TODAY! 407-580-7011

1. The bank is going to what to see your entire financial picture.  This means you will need to provide copy of back taxes, paycheck stubs, bank statements, personal financial statement, etc.  They will want to know what all your assets are.
2. The bank may want you to sign a promissory note for the difference, now it will most probably be at a hugely reduced amount and may include monthly payments.
3. When the bank gives the final approval of the short sale, they may request that the escrow close in as little as 30 days, sometimes sooner.
4. As the seller, you can not receive any proceeds from the sale.  Period.
5. Your Real Estate agents, and Title company, may have to work for reduced fees.
6. The banks are incredibly overwhelmed with short sales and many times a decision can take upwards of 90 days; however, recently the approval process has been streamlined at many lenders.
7. Your property may be foreclosed on during the short sale process because the bank can not process the short sale in time; however, if you have a strong agent they should be able to get the foreclosure postponed give me a call to help postpone any foreclosure dates.
8. Do not expect to receive any information on a regular basis.  There may be weeks that go by with no news from the lender.  This is perfectly normal.
9. The bank will want to get a BPO (broker price opinion) and/or an appraisal of your house.
10. Be patient.  This is the best policy.  Try to avoid being stressed out over something that you can not control.  If you have a well trained agent, you are in good hands.

If you have any questions, please don’t hesitate to contact me.