Is Buying a Bank Owned Home a Good Bet?

February 1st, 2012

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook.

Is buying a foreclosure a good bet?

Is buying a foreclosure a good bet?

Is buying a home that is owned by a bank (a home that has been through the foreclosure process) a good bet?

I’ll keep this short and simple.

Take the words referencing “bank owned” out of the above sentence.  That leaves you with, “Is buying a home a good bet.”

It is all about the HOME itself.

Do you like the home?  Does it have the right amount of kitchen, bath and bedroom space?  Do all the extra things that come with it, communities, school, yard space, commute, etc., really work for you?  If these things fit the bill, by all means buy it.

After all, the house doesn’t know it was foreclosed on.  You wouldn’t know either except that it’s part of the public record and probably marketed that way to find a buyer quick.

Here are the caveats:

Do your inspections, and do them with a fine toothed comb.

When it comes to the paperwork that the bank wants you to sign (it will come from the Realtor who is marketing the home and will be given to your Realtor for you to sign), take it to a real estate attorney and have him or her go through it with a fine tooth comb.  Make sure you can get out of the contract (and what it will cost, if anything, ideally no cost) if you are uncomfortable with the results of the inspection.  Do this before you sign it.

And, insist that a local title agency, or your attorney, provide the owner’s title insurance policy with the same endorsements that a lender’s title insurance would have for the same house.  EVEN IF YOU HAVE TO PAY FOR IT YOURSELF.  That should save your butt if there is something that wasn’t done to code or, goodness forbid, two years down the road a court determines that there was a robo-signing issue with the house and gives it back to the original owners.

Wow, I haven’t used all caps in a blog post I think ever.  Must be an important point!

Contact St. Augustine Team for a group of Realtors that will make sure you hit all the important points.  Or just call Broker Sean Hess at (904) 386-8327.

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The Foreclosure Next Door. What to Do?

January 29th, 2012

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook.

The foreclosure next door, in better days.

The foreclosure next door, in better days.

There’s a foreclosure next door.  The owners have moved on to parts unknown.  The grass is getting high (this is Florida after all), but the value of the home is getting lower as a lack of care causes it to deteriorate.  Could be your value is deteriorating too, as your home sits right next door.

What can you do?

Well hopefully a little bit more than I can.  You see, I have this same problem, literally.

The house to my rear foreclosed two years ago.  It’s been empty ever since.

If your city or county has a code enforcement division they may be able to help.  Some municipalities will actually cut the grass and then esentially bill the foreclosing bank at closing in order to clear title.   Even if the house hasn’t been foreclosed yet and the owners have simply absconded, that may be enough for the city/county to get out there.

If you live in a homeowners association they may be empowered to take care of the landscaping/yard work already, however, there is less likelyhood that they’ll get paid back.  We had a short sale a few years back where the owners abandoned the house and then essentially disappeared.  Because our sign was in the yard the neighbors started calling us.

We finally pulled the sign so people would quit calling (our calls to the owners went unanswered).  We called the homeowners association to alert them to the problem (not sure why the residents didn’t).

My partner Ron was the past president of an area HOA and when a similar situation arose in his neighborhood, the HOA did move forward on the yardwork.  While they weren’t sure if they would see the maintenance bill squared when the foreclosure proceeds were dispersed, the board felt their action was neccessary to protect values in the neighborhood.

You can even contact the lender on the property if you can find it in public records.  In our county (St. Johns County, Florida) the mortgage holder is typically listed in the clerk or courts filings, however, it can be really dificult to track down the person in charge, especially if the loan servicer has changed.

In my case there was little I could do.  The county doesn’t have any procedure to handle the situation, there is no HOA, and I couldn’t get the bank alerted to the problem as they would not respond to calls, emails or even letters.

So to protect my own property I mowed a buffer area probably 12-14 beyond my back line, and posted “private property” signs at the line.  I noticed at least one of the home’s other neighbors did the same on his side.

What else can you do?

Contact St. Augustine Team for agents that can help you find a home in the most stable neighborhood, or simply call broker Sean Hess at (904) 386-8327. 

 

 

 

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When Do I Get to See the Home Disclosure?

January 27th, 2012

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook.

When does a buyer get to see the home disclosure?

To disclose this wood rot or not, that is the question.

To disclose this wood rot or not, that is the question.

In the state of Florida there is no set time for when a disclosure has to be made.

In the strictest sense, no written disclosure is even required.

However, in Florida, latent defects on a home (defects that can’t be seen with the naked eye, and are known about by the owner) must be disclosed to a buyer before closing.

A seller who fails to disclose sets himself up for a lawsuit if it can be proved that he knew about a latent defect and didn’t disclose it.

In my opinion the best time to disclose is during the offer stage.  That way if a buyer has any qualms about the disclosure they can walk away even before they sign the contract.  Or, a buyer can read the disclosure and have their inspector narrow things down on a “worry list,” a list of things that really get looked at hard during the inspection.

This will make the buyer much more confident going forward, and the closing a much more certain thing.

So what should a seller disclose?  What would constitute a latent defect?

Let’s say a skylight leaks everytime it rains, and the seller knows this.  He knows because everytime he goes into the kitchen when its raining there is water dripping from the skylight.  So he patches it just for a few days to make it through inspections.  Then the buyer moves in and it leaks.  It’s obviously patched but not disclosed.  The buyer can probably sue.

Take the same situation above, but in this case the seller has the skylights professionally sealed.  Or, he seals them himself, but correctly.  They don’t leak for two years.  Does he have to disclose that they leaked?  If they’ve been fixed, they’re not leaking, and there is no additional unrepaired damage from the leaks…this probably doesn’t need to be disclosed because it’s an old problem that has been fixed.  On the other hand, the seller could disclose it because it’s a way of saying, “Hey, I really took care of this place and fixed things fast,” in order to give the buyers extra confidence.

Here’s an example of how it actually works in practice.  In the photo above there is wood rot on the door to the left.  Do you have to disclose it?  No, because it is obvious to the naked eye.  It is not a latent defect.  But did the sellers disclose it anyway?  Absolutely.

Why?  Just in case the buyer came back after the fact and claimed that they didn’t know that wood rot was a defect, and that the sellers should have told them wood rot was a defect.  Remember the woman who succesfully sued McDonalds because she spilled coffee on herself, because the coffee was hot?  Think along those lines.

One last thing: banks and REO companies that handle foreclosures rarely give or sign disclosures.  Why?  They never lived in the home (having acquired it through foreclosure), and truly have no idea.  So if you are buying one of these homes inspect them with a fine tooth comb.

Contact St. Augustine Team to get you through the disclosure process, or just call Broker Sean Hess at (904) 386-8327.

 

 

 

 

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5 Home Repairs You Will Have to Make

January 25th, 2012

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook.

This water spigot cost $275 to replace.

This water spigot cost $275 to replace.

If you are a first time buyer, how much should you have in the bank for repairs?

The rule of thumb is to have 12 months income saved, not just for repairs, but in case of job loss so you can make the payments.

That being said, here’s what typically breaks down in the first few years of owning a north Florida home:

1). The A/C Unit.

Just about every home in this part of Florida has central heat and air.  And because these machines get such a workout, they are usually the things that break the most often.  Sometimes it’s just a resistor that will cost $200-$300, sometimes it’s the whole machine.

If the whole machine breaks down it’s going to run closer to $3000-$4000, which will replace not only the outside unit, but the air handler inside the home (they have to be matched in most cases).

Even newer models can break down because either the previous owner didn’t change the filters enough, or salt air near the beach made quick work of the exposed exterior unit.

2). The water heater.

This part of Florida has notoriously hard water.  And natural gas heated anything is pretty rare (everything is almost exclusively electric).

So your heating elements are going to get encrusted with carbonate deposits suspended in the water.  Figure less than $100 if you do it yourself for a new element(s), $200-$300 if a plumber comes out.

Because of the hard water your water heater will have an overall shorter life as well.  So figure, go out and buy one at Home Depot for $200-$250, and then have a plumber install it for another $200-$250.

You could also get a water softener, but those things aren’t the most environmentally sensitive things.

3).  Appliances.

Appliances break.  Usually it’s the refrigerator, which will run anywhere from $150 (on Craigslist) to $1000+ for the latest stainless model.

Then the dishwasher, a victim of hard water (see water heater above).  And then, less often, the microwave or stove.

4).  Plumbing.

Hard water does take a toll, but most plumbing items you see will be due to age or use wear-out.

Things you will be replacing?

Water spigots.  I’ve been charged $75 to $275 a pop to have a plumber come out and do one of these.  The $275 was for a spigot on a brick exterior home that was under contract to sell.  Yes we were ripped off.  No I don’t use that plumbing company anymore.  I don’t mind paying $75 for a spigot when it includes the call out fee–that’s only fair.  But when they charge $75 for each spigot…that doomed another company.  Pigs get fat, hogs get slaughtered.

You will also invariably clip your water shut off valve on the home’s exterior with the lawn mower.  Or the water line will break at the meter.  These may only be $200 or so for the fix, but your water meter will run up before you discover it.  If you’re lucky you will see pooling water (or how amazingly green the grass is on just one spot of your property).

Lastly, you may spend a few bucks replacing the wax ring, the water shutoff, and or the seat on a toilet.  All cheap fixes you can do yourself.

5).  Water damage.

This is related to plumbing and may require a plumber.  Typically what happens is that a faucet leaks just enough to contact a wood cabinet or counter, and then the wood warps.

Generally these aren’t expensive fixes if you do it yourself.  If you have to call a plumber to fix the faucet or lines, and possibly a general contractor to fix the wood, figure $200 for the plumber and $300 for the contractor…most of it on call out fees with a little bit of supplies and labor.

Contact St. Augustine Team for Realtors that will get you through the tough fixes, or just call Broker Sean Hess at (904) 386-8327.

 

 

 

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How Much Does Real Estate Cost? Buyer Closing Costs

January 23rd, 2012

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook.

How much does real estate cost?  What are buyer closing costs for real estate?

Kate Stevens, broker associate, and I did a short video on the subject below.

Here’s what we cover in the video:

Settlement fees, tax proration, HOA/Condo proration, HOA/Condo transfer fee, loan origination fee, appraisal, credit check, pre-paid interest, private mortgage insurance, pre-paid insurance premiums, lender title policy and endorsements, recording fees, doc stamps on the mortgage, survey and flood elevation certificate, intangible tax.

Coming next: seller closing costs.

Contact St. Augustine Team to get a handle on your closing costs, or call broker Sean Hess at (904) 386-8327.

 

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Why Do So Many Swimming Pools in Florida Have Screens?

January 19th, 2012

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook.

Screens like these keep the leaves that fall twice a year out of the pool.

Screens like these keep the leaves that fall twice a year out of the pool.

Why do most swimming pools in Florida have screens or screened enclosures?

Well, it’s pretty simple.  As my uncle says, “The trees only shed their leaves twice a year, January through June, and July through December.”

Screens and screened enclosures eliminate A LOT of the daily cleaning you do when you own a swimming pool.  Also, to a certain degree they keep the bugs at bay (though I don’t think there’s a screen on earth that will completely eliminate sand gnats).  And they can keep most of the larger critters out, from frogs to snakes.  Trust me, it’s nice not to clean frogs out of your pool’s cleaning system twice a day.

People that have had both a screened pool and an unscreened pool say an unscreened pool runs about 4 degrees warmer and is easier to heat if you have a heating system.

For insurance reasons pools in Florida have to either have a fence surrounding it, or an enclosure of some type (like a screen), with an entry handle that is too high for a child to reach.  The reason being so kids in the neighborhood don’t wander over and drown.

Looking for a pool home? Contact St. Augustine Team today, or call broker Sean Hess at (904) 386-8327.

 

 

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An Easy Way to Know You’re Not Getting Taken Advantage of by a Lender

January 16th, 2012

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook.

Are you getting taken advantage of by a lender?

You better shop around.

Are you getting taken advantage of by a lender?

There’s an easy way to find out: shop around.

I know it sounds crazy.

The mortgage people I work with are trustworthy.  If they don’t have the best rates on a particular loan they will tell you.  A lot of times they will even tell you who in town might have the best rate (if they don’t).  But there are still a few clunkers out there–as a Realtor I know who they are, generally–but if you wander into their office first, there might not be much I can do to help you.

Here’s why you want to shop.

Banks can and do change the interest rates they charge on a loan every day.  Why?  Well, if they have too much loan volume and they need to slow it down, then they raise rates.  If they need loan volume they lower the rate to attract it.  So if you’re looking at a bank or credit union for a loan that’s why you want to shop different companies.

If you go to a mortgage broker, he or she can shop several companies at the same time for the best rate.  But, his or her company will have certain guidelines on what they must charge to originate the business.  So when you factor the closing costs in, you could get a lower interest rate at Mortgage Broker A, but pay higher closing costs, or get a higher rate at Mortgage Broker B but pay lower closing costs.

How can you tell which of these is a better deal?

You can tell which is the better deal by a thing called “APR,” which stands for “annual percentage rate.”  The lower the APR, the better the deal. 

APR factors in the closing costs of the loan along with the interest rate.  In the example above, Mortgage Broker A might give you a 5% rate with 7.25% APR, while Mortgage Broker B gives you a 5.25% rate on the same loan, but with an APR of 7% because the closing costs are lower.  In this case you want to go with Mortgage Broker B and the lower APR.

Now, how do you get an APR?  Well you go shopping lenders and ask for a Good Faith Estimate, also called a “GFE.”  Based on your income, credit, assets, the type of loan etc., it will spit out an APR in black and white.

The actual shopping…going to each broker or lender…is the pain-in-the-yang part, and there may be some cost involved if a broker or lender wants to run your credit first.  The mortgage brokers that I work with typically don’t need to do a credit check for a preliminary GFE.  However, if you are credit challenged, they may have to run the report just to see where you really stand.

The type of property that you are looking to buy will matter as well: homes, condos and mobile homes each work under a different set of lending guidelines so tell the lender/broker exactly what you’re looking for.  If you tell the broker you’re buying a house and make an offer on a mobile home, you may be denied because of the mobile home, or your closing costs might be double.

Contact St. Augustine Team for a group of agents that will help you track down the best APR, or just call Broker Sean Hess at (904) 386-8327.

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Is it Possible for a Buyer’s Agent to Work 100% in Your Favor?

January 13th, 2012

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook.

Climbing, as does real estate, requires trust.

Climbing, as does real estate, requires trust.

“Honestly, is it possible for a buyer’s agent to work 100% in your favor?”

I saw this question on an online forum the other day and was prepared to answer it in this blog.

It seems that a buyer was shopping real estate agents and just couldn’t get someone whom he felt could be “100%” committed.

But before I could write my own post, another agent on the forum, a Broker from Seattle named Mack McCoy, answered it far more eloquenty than I ever could have.

He said:

“There are steps that need to be taken in this business relationship before the agent can commit to the interests of the buyer.

“One is that the agent trusts the buyer. I’m serious about this. If the buyer has a scheme going on where they’re looking with several agents, or is hoping to find an end-around the agent, don’t expect the agent to throw themselves into that vacuum.

“One is that the buyer trusts the agent. This requires a level of sophistication in the buyer, because a good agent knows the difference between earned trust and blind faith.

“Another is that the buyer (or seller, this all applies to a seller client as well) is sincere in setting out to close a deal. If you’re just “testing the market,” don’t be surprised if an agent doesn’t throw themselves wholeheartedly at an exercise in which they will not get paid.

“But if you have mutual trust and respect, and a sincere desire to close a transaction given the realities of the marketplace, you can have an agent who will then work 100% in the best interest of the buyer – even to the point of advising them to walk away from a specific deal.”

I couldn’t say it any better.

Believe it or not, the reality of a real estate agent is that it takes approximately 10 buyer prospects to achieve a single buyer sale.  Imagine the amount of work that takes!  Typically those 10 prospects will winnow down to 3-5 who actually look at property…imagine the amount of time, gasoline and research resources a Realtor has to bring to the table for each one!

And then the dude that “just can’t wait to move,” who you’ve showed 15 houses to over a weekened suddenly disappears and won’t return calls.  This really happens.

Or the same dude walks into an open house and writes the contract with the agent standing there, cutting you completely out of the deal (the Realtor that writes the contract gets paid).

So, if you want 100%, you have to give 100% back.

Contact St. Augustine Team for a group of agents who always make sure you get an 100% effort.  Or just call Broker Sean Hess at (904) 386-8327.

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How to Choose a Realtor: a Checklist

January 10th, 2012

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook.

In our last blog post we did “How to Choose a Realtor: an Overview.”  Below you’ll find a video outlining a more specific way to find a Realtor, and a checklist below that .

If you’re looking for a real estate agent Iwerecommend:

1. Ask Around. One of the easiest ways to find a good Realtor is just to ask your friends or co-workers who have bought or sold a home recently.  That would be an excellent way to get a name or names, and then you can do the check up from the neck up as outlined below.

2. Research Addresses. Another way is by driving around your neighborhood (or any neighborhood) and look for homes for sale.  Write down the addresses and then punch them into Google or another search engine when you get home and see what comes up.  Do you like the marketing and media available for the home?  Does anything come up at all?

The reason you do this is just to find out how fast, how easy, and how available it is to find any individual Realtor’s home for sale on the internet.

3. Absortion Rate. Once you start narrowing down agents you want to find out how quickly their inventory sells.  For example, if you have a Realtor who has 24 listings he or she is probably Mr. or Mrs. Big Shot in town.  However, if they are only selling 1 listing a month it will take them 24 months to sell their inventory (which is horrific).  It would be better to choose a Realtor with only 4 listings but who will sell out in 2 months…they are twice as effective as Mr. or Mrs. Big Shot.

Unfortunately, most of the time the only way you can get a Realtor’s sales figures is from the sales agent themself.  What you want is current sales in the last 24 months, current inventory, and current pendings.  If they sell one listing a month and have 24 listings that means it takes them 2 years to sell out their inventory.

4. Days on Market, with a Grain of Salt. Another thing to consider is Days on Market.  For example, if it generally takes 60 days to sell a house in a given neighborhood (which means the near side would be 30 days and the long side 90 to make a 60 day average), if a Realtor consistently beats the average or is at least always within the long side, that might be a good person to hire.  If they are constantly selling well past any window, they might not be the best choice.

The grain of salt?  Every home sells in its own time.  The reason most homes don’t sell is that a seller insists on a higher listing price…and then won’t back down when it becomes obvious that the price is the sticking point.  Also, it’s not unusual for some classes of homes, high-end luxury for example, to sit on the market for 2 years because the buyer pool is so small.

Most real estate agents work both sides of the fence, so to speak.  In other words, half their business might be with sellers, and half with buyers.

5. True Buyers Agents are Harder to Find on Internet Searches.  Agents who work strictly with buyers will be much harder to find because their names won’t be tied with any listing.  And let’s be honest, most buyers searching on the internet are searching listings and find their agent that way.

To find a true buyer’s agent you can google something like “buyer’s agent (insert city),” but keep in mind that if you do that you will find the agent who is best at Search Engine Optomization, not necessarily finding you a home.

6. Check the Agent’s Online Resume. So after you find a couple of buyers agent names do an internet background check (and this goes for seller’s agents too) on places like YouTube, LinkedIn, and Google (Bing, Yahoo) to get a better idea of how these agents work.

When you check up on an agents’ online presence keep do this in mind: Kate, our partner Ron Barry, and I were the original “St. Augustine Team,” so we don’t have individual Realtor profiles on Facebook, but instead St. Augustine Team Realty’s profile doubles as our profile.  But each of our agents has their own individual profile, and we also promote our individual agents on the company website.  So be aware when you’re choosing a Realtor, if they don’t have an “individual” page it may because they are under the company banner.

For a GREAT Realtor in St. Augustine, contact St. Augustine Team, or just call broker Sean Hess at (904) 386-8327! 

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How to Choose a Realtor: An Overview

January 7th, 2012

by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook.

Kate and I did a video last month on how to choose a Realtor, which you can view below.  It’s more of an overview than a checklist.  For the checklist see our next blog post which will cover some specific examples on how to choose a Realtor.

For a group of GREAT Realtors contact St. Augustine Team right away!  Or call Broker Sean Hess at (904) 386-8327.

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