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Mike Sullivan's Blog

By Mike Sullivan | Agent in Alachua, FL
  • Why 'Go It Alone' when looking for Real Estate?

    Posted Under: Home Buying in Gainesville, Home Selling in Gainesville  |  November 26, 2011 5:41 PM  |  379 views  |  No comments

    'Which Way Do I Go?'I had an interesting experience today.  A customer had called me before Thanksgiving asking if I would show him some rental property.  The reason he had called me quite frankly was that another realtor had not returned his call.  I told him I would show him some properties, and sent him four or five for his consideration.  When I called today to confirm our appointment, you could tell he was very stressed, and running from appointment to appointment during the day.

    Obviously he felt he had to discuss with the ‘listing’ agent the specifics or any listed property.  He had no understanding of what the “Multiple Listing Service” is, nor the benefit to a prospective customer!

    In a nutshell, here is what the Multiple Listing Service provides…..

    1. It provides access for any realtor to show any property listed
    2. It allows a buyer to work with only one agent!  Work together to assess pros and cons of properties meeting your search criteria
    3. It avoids having to juggle your schedule to meet with multiple vendors
    4. Your realtor will determine the market value of the property being considered, not what the seller is asking.
    5. You are able to have your realtor negotiate for you, representing your best interest as opposed to the interests of the seller.

    At the end of the day, we agreed that I would stick to real estate, and he would stick to areas of his expertise!  He wouldn’t try to be a realtor, and I would not try to be a pharmacist!

    For more information, check out the buyer’s guide on my website.

  • Should a Retiree Borrow Against the House to Gain from Low Interest Rates?

    Posted Under: Financing  |  October 12, 2011 1:07 PM  |  308 views  |  No comments
     The good coming from today’s otherwise bleak economy is some of the lowest interest rates in more than half a century.

    So some people want to know if they should take advantage of that – to the point of refinancing more than what they actually owe on their home loan.

    One 75-year-old wanted to ask certified financial planners if they thought it was a good idea for him to take out a $250,000 loan when he owes only $50,000. The extra $200,000 he could invest in relatively safe bonds, he said. Plus, he said he could deduct the mortgage interest on his federal income taxes.

    Not so fast, said the planners.

    What he wants to do is borrow to invest – and that’s not such a good thing, especially for a retiree, said Matt Saneholtz, president-elect of the Financial Planning Association of Greater Fort Lauderdale, Fla.

    “Many advisers suggest not having any debt during the retirement years and I tend to agree,’’ Saneholtz said. He suggested the man ask his financial planner about the strategy.

    And the retiree may not save as much in taxes as he thinks: If he’s in the 25 percent tax bracket, then he saves only about a fourth of the interest he pays, Saneholtz said.

    Also, borrowing to take a tax deduction may not be a good idea as Congress has been floating the idea of eliminating the mortgage interest deduction, said panelist Blair Shein, a former president of the Financial Planning Association.

    Shein said he doesn’t think that Washington will act any time soon to eliminate the popular deduction – but it may happen down the road.

    Copyright © 2011 the Sun Sentinel, Fort Lauderdale, Fla., Donna Gehrke-White. Distributed by McClatchy-Tribune News Service.

    Bottom line, it seems that predominant thinking would suggest retirees NOT borrow against the house in the hopes of offsetting the interest paid with larger gains from investing.  In this market, I would ask, where are the larger gains?!

  • Citizens Insurance to require Sinkhole Inspections in Some Areas

    Posted Under: Home Insurance in Florida  |  September 30, 2011 12:57 PM  |  482 views  |  No comments

     Effective tomorrow, Oct. 1, 2011, Citizens Property Insurance Corp. won’t automatically cover sinkhole damage through an insurance rider in certain high-risk areas without a pre-coverage sinkhole inspection. While the inspection is a new requirement for the state-owned property insurer, many private insurers already require sinkhole inspections.

    The change applies to all new policies in the affected areas – both existing homeowners applying for first-time sinkhole coverage and people planning to buy a home. Homeowners who currently have sinkhole coverage through Citizens do not need to schedule an inspection.

    The new rule is effective for home purchases in four Florida counties: Hernando, Hillsborough, Pasco and Pinellas. The inspection applies statewide, however, if an answer is “yes” to any sinkhole-related question on the insurance application.

    A Citizens-approved inspection firm must perform the sinkhole inspections. The homebuyer must pay half the inspection fee directly to the inspection company and Citizens will pay the other half, though the fee is non-refundable even if Citizens turns down the sinkhole coverage application.

    “According to published information from Citizens Property Insurance, a sinkhole inspection report could take up to 30 days to complete,” says Margy Grant, Florida Realtors corporate counsel. “To avoid any delays before closing, we advise Realtors to secure property insurance sooner rather than later.”

    According to Citizens, a negative sinkhole inspection does not automatically disqualify a home from coverage, but it makes the approval process more complicated.

    Grant says that both residential purchase contracts available from Florida Realtors contain optional addendums that would protect buyers if they failed to secure sinkhole coverage. “Both the FAR-9 and the FAR/BAR contracts allow a buyer to withdraw if they cannot get ‘comprehensive’ homeowner’s insurance at an agreed upon price,” she says. But Grant reminds everyone that they must use the correct addendum.

    Citizens has posted a PDF list of frequently asked questions on its website about the new sinkhole policies. For more information, go to www.citizensfla.com

    © 2011 Florida Realtors®

  • Some encouraging news for Florida

    Posted Under: Market Conditions  |  September 16, 2011 1:14 PM  |  285 views  |  No comments

    Florida’s improving economy should avoid recession, even as the recovery fights significant headwinds from a devastated real estate industry.

    That’s the conclusion from the latest outlook for the Sunshine State by Wells Fargo, which sees South Florida and Tampa leading the rebound in hiring this year. Both markets have seen modest job growth in recent months, and payrolls are up about 1 percent in both regions during the last three months.

    “Florida is slowly battling back from its worst recession in modern times,’’ the report reads. Wells Fargo expects economic growth to hit 2.2 percent next year in Florida, despite growing anxiety that the nation is heading for a second recession.

    The Wells Fargo report credits a strong rebound in foreign tourism for Florida’s improving fortunes, with South Florida and Orlando enjoying outsized boosts from their popularity with travelers from Europe and Latin America.

    Still, South Florida gets special mention in the report as a particularly troubled region. “South Florida’s recovery from the Great Recession has been painfully slow,” the report reads. Among the biggest problems Wells Fargo cites: nearly 40 percent of the region’s mortgages are either in foreclosure or at least 90 days overdue, compared to the national average of 11 percent.

    Copyright © 2011 The Miami Herald, Douglas Hanks. Distributed by MCT Information Services
  • Between a Rock and a Hard Place....Favorable interest rates, low equity!

    Posted Under: Home Buying, Financing  |  September 12, 2011 6:02 AM  |  321 views  |  1 comment

     Fixed mortgage rates fell this week (Sept 9) to the lowest levels in six decades. But few Americans can take advantage of the rates to refinance or buy a home.

    The average rate for the 30-year fixed mortgage fell to 4.12 percent, down from 4.22 percent.. It’s the lowest level on records dating back to 1971. Freddie Mac said the last time rates were cheaper was 1951, when most long-term home loans lasted just 20 or 25 years.

    The average rate on a 15-year fixed mortgage, a popular refinancing option, fell to 3.33 percent from 3.39 percent. That’s the lowest on records dating to 1991 and likely the lowest ever, according to economists.

    Record-low mortgage rates have done little to energize the depressed housing market, however.  Sales of new homes are on pace to finish the year as the lowest on records dating back a half-century. The pace of re-sales is shaping up to be the worst in 14 years.

    Many Americans are in no position to buy. High unemployment, scant wage gains and large debt loads have kept them away.

    Others can’t qualify for the lowest rates. Banks are insisting on higher credit scores and 20 percent downpayments for first-time buyers. Many repeat buyers have too little equity invested in their homes to meet loan requirements.

    “Low rates are great, but the real issue is that the pool of people who can get a loan or refinance is small,” said Greg McBride, Bankrate.com’s senior financial analyst.”

    Nearly a third of homeowners have nearly zero equity or are underwater in their mortgage, according to the real estate research firm CoreLogic. That leaves then unable to refinance because of lender-imposed limits and the cost of extra fees.

    Low interest rates are not, in and of themselves, the solution to the housing recovery.
  • So, should I purchase a rental property as an investment?

    Posted Under: Market Conditions  |  September 8, 2011 6:13 PM  |  282 views  |  No comments
     The rental market is continuing to heat up and can offer potentially big returns for buyers willing to jump into the landlord role.

    For investors looking to take advantage of low record-reaching mortgage rates and big discounts on home prices, the opportunities are plenty. Rents are rising and demand is up too, partially due to the 4 million former homeowners who’ve faced a foreclosure and are now renters.

    In response, more homes are turning into rentals: Nearly 35 percent of occupied homes were rented in 2010, which is a 33.8 percent increase from 2000, according to a recent study.

    In more than 500 cities, demand for rentals has increased, with vacancies for rental housing reaching its lowest level since 2003, according to U.S. Census data. Plus, rents are on the rise too: Nationwide, rents increased 11.6 percent in 2010 to $1,320 a month, on average, according to Hotpads.com, a real estate research firm.

    So what does all of this mean to me...should I go out and purchase a rental property?,,,,not necessarily.  A couple of considerations in purchasing investment property...you should consider the return on your investment...if your rental income does not cover your expenses (mortgage, maintenance, collection efforts, etc), you're not on the positive income.  Secondly, not everyone has the 'mindset' of a landlord....challenges with finding good tenants, maintenance issues, these are just a couple.

    Even so, investing in real estate in my opinion represents a much more stable investment at present than the stock market.....and should be a part of a diversified portfolio.

  • Conforming loans change Oct 1

    Posted Under: Financing  |  September 7, 2011 6:50 PM  |  275 views  |  No comments
    Time is short for some buyers and owners of more expensive homes to get the best terms on mortgage loans.

    Starting Oct. 1, Fannie Mae and Freddie Mac will cut the size of loans they buy from lenders. That will force many future borrowers into more expensive and harder-to-get jumbo loans.

    The Freddie and Fannie limits, which are generally $417,000 for single-family homes nationwide, were raised in 2008 in some high-cost housing markets to stimulate the economy. In many areas, the limits rose to $729,750 and next month they’ll fall to $625,500. Limits will drop more sharply in some areas and less in others.

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