Real Estate Q And A

Dated: August 3 2015

Views: 271

The Q and A session went great! Thank you all so much for your questions and joining the conversation!

Here are the results:

Q: How is the market in Pinellas County?

A: This answer varies... "The Market" is neither good nor bad as a whole. Instead, we have to look at price point, quality, location, and finishes. We are in a Buyer's Market in some areas ($300,000+ price point inland) and a Seller's Market in others ($150,000 to $250,000 3 bedroom 2 bath pool homes inland, and everything around the beach areas). While the above answers are generic in nature, a good Realtor can usually find a "deal" on homes that are supposedly in the "Seller's Market" category. REMEMBER: There are 20+ houses PER DAY that are bank-owned and that number isn't slowing down anytime soon! This is what you need to target to get the deals!

Q: What's going on with flood insurance?

A: Great question! Flood insurance rates just took a hike of about 15% across the board. Direct Gulf-front properties not being used as primary residences were hit the hardest at about 25% while single family homes in AE flood zones and owner occupied were hit with about a 12% increase. The recent increases should remain stable for the next coming years because as rates go up, insurance companies will come back in to Florida to "get a piece of the pie". Insurance companies will begin being more and more competitive and rates will creep downwards again.

Q: What's the difference between an FHA loan and a Conventional loan?

A: An FHA loan is often times referred to a "First Time Home Buyer Loan" although anyone is able to utilize the program. An FHA loan consists of a 3.5% downpayment and allows the Buyer to request up to 6% of the purchase price from the seller to pay for closing costs.

A conventional loan is a minimum of 5% down payment and only allows you to ask for 3% total in closing cost assistance. Conventional loans range from 5% down all the way to 50%+ downpayment. They are also a bit less strict as far as what condition the property is in. For example, a house with rotting soffits, peeling paint, and non grounded electrical outlets (minor issues) can be approved through a Conventional financed loan whereas these item would need to be fixed BEFORE FHA would loan on it.

Q: How do real estate agents get paid?

A: This is a very common question and is often times misleading. A real estate agent is ALWAYS paid by the seller. A listing agent or Seller's agent takes a listing at a certain percentage, usually 6% or 7%. He or she then agrees to give half of that percentage to who ever brings the seller a buyer (even if that person is the listing agent themself). 

THEN, the real estates agents take their percentage back to their brokerage (REMAX, KW, Century 21...) and share a set percentage or cut with them (usually close to 30% or 40% but sometimes 50%). Ultimately, Buyer's Agents work for Buyers but are not paid by them! You're getting a free service so use it!

Q: Zillow Zestimate says my house is only worth $151,000, is this true?

A: Please don't EVER EVER EVER listen to what Zillow says your or another person's home is worth... Zillow doesn't take comparable properties into consideration because there is no way for them to compare one house to another using numbers alone (size, beds, baths, garage, footage). A real estate agent takes all of the cold hard facts into consideration but he or she also looks at finish quality, condition, amenities, and days on the market for recent comps. Zillow groups short sales, bank-owned properties, and tear-down in the same place as gorgeous updated homes with all of the amenities.

Lastly:

Q: What is a short sale / foreclosure/ auction property / REO and how do I buy one?

A:Short Sale: A house that is in the process of being foreclosed on but is still owned by a person (not the bank). A Short Sale needs to be approved by the bank in order for a sale to occur and the approval process only begins AFTER you submit an offer. Once the bank receives the offer, a process that takes between 60 days and 6 months to get a bank-approved price. The new bank-approved price is rarely flexible except for a few thousand dollars wiggle room. Short Sales are usually Cash-only or Conventional financing purchases because the owner has no reason to maintain and upkeep the home because they are upside down in it. Conclusion:Short Sales take longer and usually result in a 10% to 20% discount on the property.

Bank owned: A bank-owned house or an "already foreclosed house" can be treated as a regular sale for the most part. a 30-45 day closing is common. Bank-owned properties differ from regular owner-owned properties in that the bank WILL NOT make repairs on the property of any kind, either before or after inspections. Some bank-owned properties are in excellent shape, even updated and upgraded and will qualify for FHA or VA financing. Others are full of mold, with leaky roofs, no flooring, and smell like a dumpster and only qualify for a cash purchase.Conclusion: Bank owned properties need to be seen in person because you can hardly tell how nice or bad they are from a couple thumbnail pictures online. Quality and Condition vary greatly. A 5%-10% discount can be expected but rarely more unless the property is in horrendous shape.

Auctions: Auctions are usually just bank-owned homes being sold via auction for seller convenience. A significant discount can be expected because so few buyers and Realtors even know how the auction process works. Some auctions, like bank-owned properties, are cash-only purchases. Others can be financed (with proper financing set up prior to bidding on the property). Usually a Realtor will control the bidding mechanism online unless the auction is held live, on-site.Conclusion: Auction properties can vary greatly so ask a real estate professional who has experience with purchasing auction homes to help!

Thank you all and have a fantastic week! 

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