Orlando Real Estate Voice

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.

Buyers:

1. First understand that this process may take 90 days after you’ve submitted your offer. Don’t go into a short sale if you have a specific timeframe that you must have the home closed.

2. Understand that there are no guarantees in a Orlando short sale.

3. The lender may require more cash or a higher price up to the actual moment of closing.

4. The lender will most likely not allow the seller to pay any of your closing costs or give allowances for repairs. Typically, all deals are “AS-IS”.

5. There is likely no certainty of the final price or closing date until just before closing. When the final word comes down from the lender that they’ll accept the offer, typically they’ll want to close in a week or less. Have your inspectors and lender ready to move forward.

6. Be sure there’s an out for the buyer if the contract is not approved by a certain date. You don’t want to be stuck in limbo waiting for the lender. Make it contingent upon some reasonable date.

7. Don’t pay for inspections or any other expenses until you know the lender has accepted your offer.

Short Sales could be a great way to purchase property at a discount as long as you have patience.

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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 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.

The Orlando Real Estate Market is a changing market. Are we at the bottom? Well, no one knows for sure. However, I do want to share with you the statistics from the Orlando Regional Realtors Board that are compiled monthly.

Please Click Here to view the Market Snapshot

 You can see that prices came down and sales responded by picking up every month this year through June. July sales typically fall a little behind June, and this year was no exception. Look for August to be a little slower still as school resumed this week. September will also be a little behind the summer numbers, but we usually see a rebound in October. Of course, there is a huge number of pending sales that could finally get closed creating a sales spike primarily from Short Sales. Many homes were put under contract as a short sale in the last 60 days that have yet closed. I’m guessing we’ll show a bit of a spike in September and October this year.

******************************************************************************************  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.

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

BPO stands for Broker’s Price Opinion.  The term Broker’s Price Opinion (BPO) is a method that a Real Estate Broker (or an agent acting on behalf of their employing broker) uses to estimate the value of a Real Estate property/house.  The estimate of value is submitted in a BPO report (2-3 pages) that includes local Orlando Real Estate market information, neighborhood analysis, and (comps) properties that compare to the (subject) house that is being valued.  This method of estimating a value has similarities to a Certified Market Analysis CMA and a residential Real Estate appraisal.

Performing a BPO, in the BPO industry, means that a Real Estate Professional (agent, broker, or appraiser) is requested by a financial institution to submit an estimate of value for a property in a BPO report for a fee. A financial institution may order a BPO for the following situations:

• home equity lines of credit
• home equity loans
• requests to remove PMI – Private Mortgage Insurance
• REO/Foreclosures/Short Sale
• Any other reason that a bank/lender needs to make a financial decision on a property

BPO Process

1. A bank receives an application for a Home Equity Loan, Home Equity Line of Credit, request to remove PMI etc…  The loan officer must determine the value of the home.
2. The bank contacts a BPO Company for a BPO (they may order multiple BPOs for comparison) on the property in question.  A due date is established for the BPO (usually within a week).
3. The BPO Company maintains a list of Real Estate Professionals that perform BPOs.  The BPO Company contacts a Real Estate Professional on their list to perform the BPO.  The Real Estate Professional’s due date is a few days before the final BPO is due.
4. The Real Estate Professional contacts the homeowner to schedule an inspection of the home or property (if an interior inspection is required).
5. The Real Estate Professional physically inspects the home/property.
6. The Real Estate Professional gathers Real Estate market information and compiles the information to determine a valuation.
7. The Real Estate Professional submits the finished BPO to the BPO Company.
8. The BPO Company conducts a quality review of the BPO.
9. The BPO Company submits the final BPO to the Bank/Lender.
10. The BPO Company pays the Real Estate Professional.
11. The Bank/Lender pays the BPO Company.
12. The Bank/Lender makes a financial decision based on the opinion of value contained in the BPO.

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.

Last year at this time Jim Cramer from CNBC was very negative about the economy and the housing market. Two days ago he appeared on the Regis and Kelly show, of all things, and he is completely the opposite. He now thinks this is the best time to buy a house in Florida before the bottom is hit and prices rise. Enjoy……….

So Give me a Call and Let’s get you going on finding that perfect property for you.

407-580-7011   Jerry

In the Orlando Metro area last month there was a total of 1,641 homes sold in June compared to 1,595 homes a year ago for a 3 percent increase. The existing home median sales price was $219,500; a year ago, it was $258,100 for a 15 percent decrease. A total of 172 existing condos sold in Orlando last month compared to 188 condos the previous June for a decrease of 9 percent. The market’s existing condo median price was $132,900; a year ago, it was $156,900 for a 15 percent decrease.   The statewide existing-home median price in June was $205,500, up 1 percent from May’s median price of $203,300. The median price of an existing condo last month was $183,700, also up 1 percent from May’s figure of $181,800. Last month, interest rates for a 30-year fixed-rate mortgage averaged 6.32 percent, down from the average rate of 6.66 percent in June 2007, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

I currently have 10 properties Listed for sale and 6 of them are short sales. I am finding that nearly 25% of the market right now in the Orlando, Windermere, Winter Garden Florida area is either a short sale property, a foreclosure property or Bank owned property. Buyers in Orlando can find a good home and purchase it at a discount, IF they work with a Realtor that know how to deal with short sales, Like Myself. Feel free to contact me at any time with questions about short sales and how to purchase a short sale at jerry@JerryLaRose.com or visit my Website at http://JerrySellsOrlando.com

Everyone involved in a short sale transaction needs to know what to expect. Orlando buyers of short sale properties need to understand what they are getting into. Some buyer’s believe that they are going to be able to “steal” a property and make a killing by reselling it. The days of Flipping homes is long gone. They have heard the stories that investors tell and think it’s a piece of cake to buy a property at 50% of the value.

While that may be the case on rare occasions, it is not the norm and should NOT be expected. Remember, the lender wants to sell the property as close to market value as possible. In fact, most lenders have pretty rigid guidelines as to how far below market value they will sell for. I have heard that some banks no matter what will not go below 15%-20% of market value. Beyond that point, they will take the house back in foreclosure. So let’s do the math, a $200,000 valued property may go for $160,000 – $170,000. Now, this same property was probably valued at over $300,000 just 3 years ago.

So, the bottom line is that if you have patience and are looking for a home in Orange county or the Orlando area you may end up saving 15%-20% of market value on a home. However, I am also finding that there are now plenty of homes that are Not Short Sales but the Homeowner needs to get out for some reason, (such as relocating) and has priced their home as low as a short sale. This is probably the ideal situation because typically the home is in great shape.

What buyers need to know?

1. Patience, Patience, Patience. It may take 3-4 months to complete the transaction once you’ve written a contract on the property.
2. Buyers must be be pre-approved before submitting an offer. The borrower’s lender is going to require proof of funds if it’s a cash deal or a commitment letter if there is financing involved. A buyer offering to close quickly with a substantial down payment is more attractive than one seeking 90% financing.
3. Buyers may not want to spend money on a home inspection or appraisal until after the short sale is approved, otherwise you’re wasting your money. Why spend hundreds on a inspection and have the bank not approve the deal.
4. Buyers should expect to buy the home in it’s “AS-IS” condition. The seller doesn’t have any money to make repairs and the lender is going to require an as-is offer. Therefore, your realtor should be using an “AS-IS” contract.
5. I recommend to all of my short sale buyers that we do NOT put up a deposit in escrow until acceptance of the offer by the bank. We’ll give a promissory note in lieu of.
6. I recommend the buyer work with a short sale expert, like myself. Working with Realtors that don’t know the short sale process and the pitfalls to look out for could kill a potential deal.

Feel free to contact me at any time with questions about short sales and how to purchase a short sale at jerry@JerryLaRose.com or visit my Website at http://JerrySellsOrlando.com

When you go through the short sale process your lender will require certain documentation. Remember, the lender does not want to take the home back through foreclosure. That is a last resort for both the homeowner and the lender. The lender would rather accept a short sale as long as the borrower can show an inability to pay the mortgage.

Each lender has their list of required documentation. Therefore, the first step is to give your Realtor signed authorization to speak with the lender about your account.

Your Realtor will then request a “short sale package” from the lender. Most lenders require the following documentation.

• Exclusive right of Sale Listing Agreement
• A copy of the executed “AS-IS” Sale and Purchase contract
• Letter of Authorization to the bank to release Information.
• HUD-1, which is the estimated net sheet from a title company. The settlement statement will show all of the expenses related to the sale with the seller receiving zero.
• Hardship letter. A handwritten letter may be better to explain the borrower’s situation and requesting a short sale. It should describe why the borrower cannot make their mortgage payments and their fear of possible foreclosure. It should be a plea for the lender to consider a short sale. Document to support Hardship (termination of employment, substantial medical bills, disability letter, etc.
• Personal Financial Statement form 1126, which includes current debt, payments and a household budget.
• Two years of tax returns and W-2′s. Remember to provide signed copies of tax returns.
• Two most recent bank statements and retirement account statements. Be sure to copy both side of double-sided statements.
• Two most recent pay stubs
• A current Comparative Market Analysis (CMA) from a real estate broker or appraiser
• Buyers proof of Funds or Loan Approval letter
• Lastly note on the submission package that they need to order the BPO immediately and a negotiator needs to be assigned.

Make sure that when you submit the package it is COMPLETE. Some times it may be better to wait a day and ensure that it’s complete than to submit an incomplete package. Remember the Loss Mitigator is deal with possibly hundreds of files at a time.

Lastly Note: With a short sale your Realtor should negotiate for the lender to waive their right to file a deficiency judgment. **IMPORTANT**