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Jim Olive's Key West Blog

Are You Ready to Get YOUR Slice of Paradise?

By Jim Olive | Agent in Key West, FL
  • What Is My Property Worth? The "Value" of a Good Appraisal

    Posted Under: Home Buying in Key West, Home Selling in Key West, Financing in Key West  |  July 18, 2013 7:10 PM  |  910 views  |  No comments

    Here's a topic that can really light people up!!  Ever try to buy a home, find yourself in a bidding war, battle through it to "victory", only to find out that your "winning" bid was higher than the appraisal?  Okay, what next?  Clearly the home is worth what you bid for it, because you and six other people who really loved it were willing to pay that much (or maybe even more!!) for it.  Any real estate agent will tell you...a house is "worth" whatever a buyer will pay for it.  But wait...what if that buyer can't get a loan to actually PAY that amount?

    What you WOULD pay, and what you CAN pay are often very different things!  The bank, you see, is not going to lend more money than what the MARKET says the house is "worth".  That is a different "value" known as Market Value.  Market value may be VERY DIFFERENT than what a buyer might be willing to pay if that buyer really MUST HAVE a certain home. Similarly, a seller who LOVES their home and raised their family there may feel the value is much higher than the market value suggests. None of those "values" are wrong.  That seller might be in a position to "pay" for what they think the home is worth by simply holding onto it, maybe even with it still on the market, and refusing lower offers as they come along. That, of course, is his or her prerogative.  That can be very frustrating for buyers who want the home and know the market value is MUCH lower than the list price, but it's reality.  It may also be frustrating for the seller, who is astonished that they can find NO BUYERS who share their view of the worth of their home.  Again...reality.  As with so many things in life, luck plays a big part in all of this.  The seller with the lofty opinion of the value of their home may be lucky enough to find the 1 in 1,000 potential buyers who LOVES the house and will pay the high price.  They would also have to be lucky enough that this buyer has the funds to buy the home even when the bank will only lend them half the money.  But hey..you never know!!

    The appraisal should match the market value of the home. All too often, though, Appraisers don't do a real appraisal, they just make sure the appraisal is high enough to make the loan work. I re-financed a home a few years ago that had a market value of between $300k and $350k. I was only re-financing half that amount, and (low and behold!!) the appraisal came in just above the refi amount, nowhere near the market value of the home. That's one of my pet peeves...if I am paying an Appraiser to appraise my property (regardless of reason), I EXPECT them to give me a reasonable estimate of current market value!! I've seen sloppy appraisals that said the home had a brick driveway or an asphalt roof, when the driveway was really cement and the roof metal...typically the result of failure to change the form they were over-writing. Sloppy!

    The bank is really just looking to make sure that they can get back the amount they are loaning on the property in the event they have to foreclose.  That's why they have the down payment, as well, it as insurance against the market value dipping below the loan amount. If the appraisal comes in too high...no problem, the bank has a big cushion.  But if it's too low you'll have to make some decisions...get a second appraisal (at your additional expense), or make up the difference out of pocket. If you really love the place and you have the means that is an option.  For many, it's not an option and can be the source of considerable angst. 

    While the Market Value should typically be expressed in a range (ie: $475k to $500k), it is a fairly scientific figure with a little bit of "art" thrown in. Where it gets tricky (and often more "artsy") is where there are no recent sales of similar homes to compare with. Very interesting subject, often clouded by emotion, and NEVER as simple and straight-forward as we would all like it to be!  But even with all the vague characteristics of a good appraisal, it is definitely something you need to get a solid loan, and therefore a critical piece of the home-buying puzzle. Appraisers are like lenders in that the best way to find a good one is through recommendations from people you know and trust. Real estate agents will be in a better position to recommend an appraiser than most non-professionals, since they deal with them far more often than the average person.

    So if you're looking for a good Appraiser in Paradise, or if I can be of any help at all in your Key West real estate quest...give me a shout at 305-393-6531, or drop me a line at Jim@OliveKeyWest.com  I can help you find YOUR slice of Paradise.
  • Got a Good Lender? You Better Hope So....

    Posted Under: Home Buying in Key West, Financing in Key West, Property Q&A in Key West  |  July 17, 2013 9:45 AM  |  894 views  |  No comments
    Okay, let me just say that I have never harped on financing with my clients.  One lender is as good as another, so long as the money is on the table at closing time.  BUT...that is a critical "so long as"!!!  I can't tell you how disruptive and stressful it can be when the closing is approaching and the lender still hasn't gotten their act together...or worse!!

    Yesterday I was scheduled to close a deal with a lovely couple from Small Town USA.  We had finished negotiating the deal MONTHS ago and everything was in order.  The lender (who's name I would be happy to share if you give me a call) had issued a "conditional approval" and knew very well when the closing was supposed to happen.  None of the conditions were difficult to meet, so this should have been a piece of cake.  But it wasn't!!!  The lender messed the whole thing up, and the couple flew all the way from Small Town to Key West for nothing!!  Not only that, but all the money they had invested (inspection, survey, elevation certificate, etc) was down the tubes and they have to start all over. 

    In fairness, it was not the lender's failure, alone, that caused this deal to fail.  The seller had decided, after signing all the papers, that she could sell the property for much more money, so she was happy to have a reason to kill the deal.  The lender was made WELL AWARE of that fact and should have been able to fund the contract without difficultly.  In fact, every time the buyers overcame whatever "problem" the lender presented, the lender "found" another one.  I am convinced that the lender had decided (for whatever reason, and they weren't telling us what the real reason was) that they were NOT going to fund this deal, no matter what.  So, they just kept creating bogus reasons until the time had run out.  At one point they demanded that the property be insured for more money than the law permits, and spent two days fighting over it.  In the end the ultimate losers were the buyers. They spent a lot of money they didn't have to and lost the home they really wanted to buy.  Why?  Because they had selected the wrong lender!!  The worst of it was, they had selected this particular lender because, as a disabled veteran, the lender had marketed a loan product specifically FOR veterans, and then let them down hard in the end.  Unacceptable!!

    I've had other closings delayed because of lender carelessness, but that's not the end of the world if the seller really wants to sell and the buyer really wants to buy and it just causes a delay, but this one really hurt!!

    So...the moral of the story??  Make sure you have a good lender who's not going to let you down.  The best is someone you know and trust.  Second best...someone who comes highly recommended by someone you know and trust.  Bottom line...the more PERSONAL the connection, the better chance you have on not getting treated poorly.  Some of the bigger, less personal "factories" don't seem to really care if they leave you standing out in the cold.

    So, if you need a recommendation for a local Loan Officer or Mortgage Broker, or if I can be of any assistance in your search for the perfect property, give me a shout at 305-393-6531, or drop me a line at Jim@OliveKeyWest.com .  I can help you find YOUR slice of Paradise.
  • Renting Vs. Buying...The Debate Rages On!!

    Posted Under: Home Buying in Key West, Financing in Key West, Rent vs Buy in Key West  |  June 12, 2013 5:25 AM  |  305 views  |  No comments

    Yes, I've blogged on this subject several times, and there are clearly pros and cons on both sides of the argument.  But, in my mind, the answer is clear!  And it's NOT just because I'm a Realtor®.  I'm also a home owner, a landlord and a bachelor's degree holder in financial management, and all these angles point me to the same conclusion!  Do whatever you have to do (within the law, of course!), but get a down payment and BUY while you still can!!!

    A recent survey conducted by Fannie Mae (the company that makes the rules for nearly all mortgages in the United States) concluded that 90% of renters say they are going to buy a home n the future.  Most of those same people are "fearful of their ability to qualify for a mortgage".

    Well, I'm here to tell you that there's only one way to find out!!  Take that first monumental step and talk to a Loan Officer.  There's no obligation and no risk!!  I can even introduce you to a few good ones in the lower keys.  With many loan programs today you can buy your first home with only 3.5% down, or just $3,500 per $100k borrowed.  For a $250k home, that means less than $10k that you'll need to save.  The best part is, after you've closed on your new home and you've start SAVING TONS OF MONEY by paying rent to yourself instead of your landlord, you will recoup that down payment in very little time.

    Take, for example, the home that I highlighted in my blog
    entitled "Stop Paying Rent and BUY this Foreclosure Deal" (see that blog here for a refresher:  http://www.trulia.com/blog/jim_olive/2013/06/stop_paying_rent_and_buy_this_foreclosure_deal).

    You can get that 3 bedroom, 2 bath practically new home with just a $7,000 down payment (or less if we can negotiate the price down!!). And you would be paying only $1200 per month, including your mortgage, your taxes, your condo fees, everything. That's probably a lot more house for a lot less money than you have right now...am I right? That is likely a $500 per month savings, which means you'll recoup your down payment in just over a year! And in that same year, housing prices will likely climb and your investment will be worth a whole lot more than you paid for it. In the last year we've seen a 12% increase in home prices. If that holds (which I believe is a reasonable assumption, though not guaranteed), your new home will have increase in value by $24,000. And that's something that DEFINITELY will NOT happen if you continue to rent!!!

    So if you're ready to take the plunge, before interest rates and home prices rise beyond your reach, give me a shout (305-393-6531) or drop me a line at JimOlive@RealtyExecutives.com.  I can help you find YOUR slice of Paradise.
  • Buy Now, Or Risk Being Left Behind...

    Posted Under: Home Buying in Key West, Financing in Key West  |  June 11, 2013 12:52 PM  |  259 views  |  No comments
    Sound like a Doomsday prophecy?  Well, the statistics back me up on this.  Yesterday's reports on mortgage rates placed them at the highest level they have been in 15 months!  And they aren't showing any signs of slowing down.  Higher rates means less buying power.  Less buying power at a time when housing prices are rising means MUCH LESS HOUSE for your money.  And if the trends continue, who knows if they'll level off in a territory where most home buyers can function? 

    I lived through the record high interest rates of the late 70's and early 80's, when people had to pay 20% on home loans, so I've seen both extremes, and I must say I like this end of the spectrum much better.  Though it may be too late to get a low to mid 3% interest rate on your home purchase, a wise consumer will act soon while they can still get low to mid 4's! 

    Not an easy chart to read, but the important point is that the peak is 1982 at 19%, and the rock bottom is about 15 months ago!

    Will the Fed let them climb out of control?  Doubtful.  But how fast and how high will they let them rise?  Only time will tell.

    With BOTH interest rates AND prices on the rise, NOW is the time to act!!

    So if you want to take advantage of low interest rates while they last, give me a shout at 305-393-6531, or drop me a line at JimOlive@RealtyExecutives.com.  I can help you find YOUR slice of Paradise.
  • Key West Real Estate: Wow! Now HAS to be the Right Time!

    Posted Under: Quality of Life in Key West, Home Buying in Key West, Financing in Key West  |  September 16, 2012 3:51 PM  |  360 views  |  1 comment
    Okay, I can honestly say that I NEVER THOUGHT I would see interest rates make history the way they have been and the way they are about to!  With rates already at record lows, the Federal Reserve announced late last week that it is committed to strong measures that will reduce rates ANOTHER half percent.  That will mean they're practically GIVING money away!!  Now, put it all together...

        Real estate still available at low prices after the big bust.
        Interest rates about to hit new record lows.
        Tax deductions and benefits of home ownership.
        Current record high rental rates.
        Current record low rental inventories.

    They all lead to the same conclusion.  It's a very personal decision, and what's right for one is not right for all, but if there were EVER a time that buying a house was a GREAT financial move...


                                               DING, DING, DING...NOW'S THE TIME!!

    So if you're ready to take advantage of this phenominal timing, or if I can be of any assistance in your search for Key West Real Estate, give me a shout at 305-393-6531 or drop me a line at jimolive@realtyexecutives.com.  I can help you find YOUR slice of Paradise.
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