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Buyer competition for the realistically SW Florida priced properties is heating up as the best values in nearly a decade are being picked off quickly.  Many buyers who think prices will decline much further will likely be left out or forced to purchase foreclosed properties, which usually are in no where as good condition or need a huge amount of work, making them not so good values. 

While sellers who think the market prices will rebound in the next few year or months will  likely be in worse shape when they sell in the bottoming out stage (predicted until sometime in 2012-see below) or the long flat market stabilization stage. The stabile stage, which is likely to come after the bottom, lasted for 3-5 years in the last major slow market in the 1980's here in SW Florida. 

The market bottom as predicted below to be sometime in 2012 means a likely stabilizing market with little or no appreciation through 2015-2017, if the last major downturn is any indicator. Sellers need to educate themselves and decide if they believe these experts, and if they do, predict the date they think their home will be worth more than it is today.  

When they choose to live through that period of time with the property they own now, sellers might think through the costs and benefits of owning the property for that time so they can make the right choice for themselves and their family. 

Richard J. Adams P.A. a noted foreclosure defense attorney provided the information below in his latest industry newsletter.  The short excerpt below sums up the S W Florida real estate market pretty well and gives insight on what the experts who study trends today are saying about real estate.    

"In the first half of the year, foreclosures continued to ravage South Florida's housing market, with one out of every 30 homes experiencing distress, according to a report released Thursday by RealtyTrac. The Irvine, Calif., company predicted little change in the picture for the last six months of 2010 -- more than 3 million homes nationwide are forecast to fall victim to foreclosure this year, pushing home prices further down.

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New credit cards, in-store credit cards, student loans and car leases are other forms of credit that drive up a borrower's debt ratio.

Grant Stern, president of Morningside Mortgage Corporation in Miami, Fla., believes car loans are "the No. 1 culprit" in lenders turning down a prospective buyer's home loan. "We always tell people as mortgage brokers, 'Get the house first, then they will give you the car," he says.

Tip No. 2: Don't switch professions (or tax brackets)

Brokers say its not earth-shattering to change jobs in the same field, especially if you are making more money at the new place of employment, but it's complicated when a professional is moving job classifications, for instance, from employed to self-employed, or from a salaried-position to a commission job. "Moving from an employee to a contract basis is a dagger," says Stern, as two years of federal tax returns need to be included with a loan application. "[In this case], it could take three years to get approved for a mortgage."

As another precaution given the nation's high unemployment rate, Stewart says it's becoming routine for lenders to get a verbal confirmation of a borrower's employment status on the day of the closing.

Tip No. 3: Try not to move around big sums of money -- even deposits

One broker says keeping your financial situation unchanged is not only refraining from withdrawing large sums of money, but also avoiding making big deposits of money in any of your bank accounts from pre-approval to day of closing. To qualify for a mortgage, one of the requirements is proof of all assets, including checking, savings, stocks or bonds, and if this is checked at any future point, the borrower may need to provide records of the fund's origins.

"That's what tight lending is these days -- providing documentation," says Jay Sondhi, a mortgage consultant in San Francisco. "What they are concerned about is that a large deposit may be borrowed money."

Though more money in your bank account is not going to sabotage your qualifications for a loan, complying with documentation requirements and time delays may make a closing a mortgage a bigger hassle.

Tip No. 4: Monitor the balance of your credit cards

Though the credit score formula is deemed an enigma by many, the balance that's riding on your credit cards plays
a big part in determining your credit score. Higher scores result in borrowers being able to secure better interest rates.

For example, during the loan process, if a borrower's credit report is pulled again, a lower score may be caused from higher levels of debt reported by the credit bureaus. The consequence of a lower score may cause the borrower may either lose their interest rate or have to pay a price adjustment to keep it, yet another bump in the road.

With tight lending policies and stricter, more spelled-out regulations in the post-boom era, getting a mortgage has become increasingly confusing for the consumer. But keeping your finances transparent and steady will help simplify the process."

For a local mortgage connection referral just contact me at jerry@765LIST.com and I will be happy to help.

Structuring the short sale as part of a 1031 tax deferred exchange may prevent unexpected tax consequences.

Claudia Kierman of ipx Investment Property Exchange Services Inc of Florida has sent us the below information.  The idea is very interesting and may well help you if you own an investment property.  It is more detailed but may work for your situation.  Please consult your CPA or Tax attorney about this information or reach Claudia Kiernan claudia.kiernan@ipx1031.com 

1031 Exchanges and Short Sales

"We are often asked whether the seller of investment property in a short sale can benefit from a 1031 exchange. The answer is yes. According to IPX 1031 Regional Manager, Jim Miller, in a short sale the lender is agreeing to release the property that is being sold from the lien of its Mortgage. Since the Mortgage Forgiveness Debt Relief Act of 2007 only applies to a principal residence, any debt forgiveness with regard to an investment property will be taxable.

For example, let's assume Ian Investor purchased 123 Main Street in 2005 for $240,000 with 100% financing. Over the past few years, the value of 123 Main Street has decreased and it is now only worth $200,000. Although Ian remains current on his loan payments he does not want to continue to own 123 Main Street because of its decreased value. Accordingly, he decides to sell 123 Main Street. His real estate agent finds a buyer and states the bank is willing to agree to accept $200,000 in a "short sale".

Although this is good news, Ian's accountant advises him that the debt forgiveness of nearly $40,000 (approximately $240,000 minus $200,000) will result in a tax liability of between eight and twelve thousand dollars. Ian does not want to pay taxes to sell a property that has already lost $40,000 in value and decides that a short sale is not a good option for him.

Ian's accountant suggests that he have his real estate agent contact his current bank to see if they are willing to exchange 123 Main Street with one of its "Bank Owned" properties. The benefit to the lender is that Ian is still solvent but "underwater" in 123 Main Street.; and by exchanging one of the properties it already owns (as a consequence of a prior foreclosure) Ian will remain financially stable and be more likely to continue paying his mortgage obligation. The benefit to Ian is that he will not be forced to recognize and pay taxes on "phantom income" and he will be able to acquire, as his replacement property, a better property which is equal in value to his original investment.

Accordingly, Ian's lender agrees to exchange 456 Park Place, worth $240,000, for 123 Main Street and transfer Ian's loan to the new property. As a result of the exchange, Ian has a better property without recognizing (paying taxes on) any gain. The lender still has one property to sell but has reduced the chance that Ian will walk away from his original $240,000 obligation.

Successfully achieving this type of transaction takes effort but it can be beneficial to investors, lenders and real estate agents. An investor could acquire the new property in an area which has stabilized and has a better chance of showing appreciation. Before selling any property in a short sale, it is very important to consult with your tax advisor. You need to receive competent advice as to what is best for your specific situation. A "do it yourself" approach may result in an unexpected tax bill which could have been reduced or avoided with proper planning."

My job is to help you with your real estate needs. Please call me at 239-765-5478 or email me at jerry@765LIST.com  anytime.

The US government has provided some sunshine for those who have been struggling with pre foreclosure and short sale homes.  Below is actual quotation from the IRS website and link which may be very useful to you and your family.    

"The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition."

For all the information details please use this link below:
http://www.irs.gov/individuals/article/0,,id=179414,00.html  

My job is to help you with your real estate needs.  If I can be of help call me at 239-765-5478 or email jerry@765LIST.com 

Area Homeowners who are looking at foreclosure in their future should take 2 and 1/2 minutes to view the video below to look at a real alternative to their plight.  The video explains the key new Federal Regulations for Short Sales.  Rules that could help make "short sale" an attractive alternative and save them lots of money and pain.

Buyers considering purchase of a short sale property should look at it also to see how those rules could affect them. 

I am pleased to be able to provide you the highlighted link below to click on which will open the snort video in a new window: PLEASE CLICK ON THE BELOW LINK TO VIEW.  Then call me anytime! 1-800-551-2223   

NEW RULES ON YOUR SHORT SALE PROPERTY WATCH THE NEW VIDEO THEN CALL JERRY 239-765-5478 YOUR SHORT SALE REALTOR! 

This is your time and you have a $6,500 added tax credit (a direct reduction in your taxes) as a homeowner who already own a property but want to buy another.  According to RISMEDIA today they report this expansion of the first time home buyers tax credit program due to expire to include existing homeowners too! Here's the details:

The US Senate has "cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut off debate on a package of measures that includes the homebuyer credit, making it virtually certain that the legislation will reach President Obama for his signature this week. 

The homebuyer tax credit, due to expire at the end of November would be extended through April 30 of next year. First-time buyers who are in the process of making a purchase would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. 

For the first time, the legislation that was recently cleared makes move-up buyers as well as first-time buyers eligible for a credit. The $8,000 maximum first-timer credit will continue and will now be available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years. 

For homebuyers across the country, the expanded tax credit would allow more people to qualify for the credit. While two-thirds of American families own their own home, and most earn less than the income limits that have been established within the extension, more buyers may be eligible. Move-up buyers don’t have to sell their current home to qualify for the new credit, but the money cannot be used to buy a vacation home. “It’s only for a primary residence,” said Regan Lachapelle, a spokeswoman for Sen. Harry Reid (D-Nev.), who helped engineer the deal. “In expanding the tax credit, we are helping first-time home buyers, as well as homeowners looking to move up to a new home, but we would exclude from the credit speculators who may have recently purchased a home intending to flip it for a fast profit,” said Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee. 

The tax credit has fired-up the housing market, driving existing home sales to the highest level in over two years."

With news like this likely to stimulate purchasing of existing homes and condominiums in our area, now is the time to get the best selection of properties and take advantage of this stimulus offering.  All good things come to an end so you may want to act now to take advantage of receiving $6,500 when you make that move!  Please feel free to contact me with your questions or to start looking now.  800-551-2223 or jerry@765LIST.com

Read more: http://rismedia.com/2009-11-04/senate-clears-homebuyer-tax-credit-extension-may-pass-as-early-as-this-week/#ixzz0W0XZUzQC

Florida's Chief Financial Officer Alex Sink reports that property and cash valued at more than one hundred seventy million dollars is being held unclaimed and waiting for the true owners. She has set up a website where you can look to see if you have any assets which you need to claim before the State auctions the assets later this month!!! If you reside or ever have resided in Florida it is worth a couple of minutes to check and is very easy to do.

Just click the link below:

http://www.fltreasurehunt.org

Buyers remained rabid in Ft. Myers, bidding up prices in order to snap up low end homes. Our traffic index fell to 72 in September from 82 in August, but this still indicates strong levels of demand (readings above 50 point to traffic above agents’ expectations) and this was the highest reading of any market surveyed this month. Agents indicated buyers have a growing sense that the bottom is here or very near and want to get in before prices increase.

Agents continued to note tough competition at the low end, with one commenting, “72% of our deals have multiple offers over list price, and most buyers start their offer over list price.” This is quite a sharp change in tone from the downward spiral experienced throughout most of the past three plus years, but prices have fallen so sharply that the affordability is very compelling. The most challenging aspects of the market appear to be getting a good appraisal and qualifying for a loan, but most foreclosure-buyers are investors paying cash so this is not an issue on those homes.

Agents said prices were stable again in September, marking the fourth consecutive month of stable or higher prices. Our home price index improved to 54 from 50, consistent with a neutral reading.This should encourage more buyers to get off the fence by giving them confidence in their investment.

However, agents did note that the stable pricing is occurring primarily at the low end and that higher end homes are still falling in value. Healthy demand led to lower inventory levels again in September, as our home listings index measured 72 (down from 78 but well above a neutral reading of 50). These are positive indicators, but the key will be continuing to make progress on inventory levels, especially as foreclosures continue to come to market."

This report is very useful for planning for our local buyers and sellers and, though not my words, it reflects the state of our local market into October!  If you would like a copy of the complete September report on the area please email me jerry@765LIST.com  and I will be happy to send it to you. 

Everyone has been crying for 4 years how much they have lost in the real estate market and now in the stock market.  The best way to recover is to buy in when the prices are low! Fence sitters beware: I always say: "You make your profit when you buy not when you sell!"  

What are you doing this Fall?

For those Lee County property owners who received their property assessments this past week and disagree with the new valuation the county has a more simplified way for you to file a tax protest with them at last! 

You can now do it online!  I am providing the link below for your convenience:

 http://www.leeclerk.org/VAB2009/