Do You Need a Good Reason to Relocate to Paradise?

Ann pointed me to an article in this month's SRQ magazine which led me to do a little digging. In July of this year Bizjournal wrote an article about the best places in the United States to grow a small business. To quote the July 8th article written by G Scott Thomas:

"If you're seeking the ideal place to grow a small business, Florida is the state for you. Four of America's five best markets for small businesses are in Florida, led by No. 1 Orlando, according to a new Bizjournals study."

And number two on that list was Sarasota! That puts us ahead of places like Las Vegas, Raleigh, San Diego and many more - here's the complete list:

http://www.bizjournals.com/specials/pages/99.html

This is a full year after Inc Magazine placed Sarasota as number twenty in it's annual list of Boomtowns, and once again the company Sarasota was in was pretty spectacular.

http://www.inc.com/bestcities/best.html?size=0&year=2006

Anyway, of course local Realtors are going to be "high" on the area they live and work and we're no different but I point these out not only for people who might consider coming here but also for the folks already here who tend to get bombarded with "doom and gloom" and who rightly are concerned for the values of their property in the area. Demographics are with us and when third parties look at the area what they see is a business friendly climate that's also a VERY PEOPLE FRIENDLY climate as well.

Have a look at the growth figures in the first table above - and yes things have leveled off growth -wise over the last 18 months but quite honestly we've needed the "breather" to get things like additional capacity in schools etc in place.

In spite of the articles about the "half backs" moving half way back home etc the area continues to grow and continues to be a very attractive place to relocate during any stage in one's life!

I am a monthly contributor to Bank of America's Realtor survey and below, with permission from Dan Oppenheim of Bank of America, is the results of the Sarasota Florida area survey. Remember that August and September are ALWAYS the worst months for Real Estate in our area. Things should pick up as "season" develops! If you would like a copy of the entire survey - let me know and I'll e-mail you a copy - Mike W.

Sarasota, FL

(6,331 single-family permits in 2006, 45th largest market in the country)

Traffic well below expectations. Our traffic index fell to 20.7 in September from 35.1 in August, pointing to buyer traffic far short of agents' expectations (readings below 50 suggest traffic short of expectations). 73% of agents said traffic was below expectations, 15% said it exceeded expectations, and 12% said it was in-line with expectations.

Prices and incentives worsen. Our price index came in essentially unchanged at 12.8 in September from 11.1 in August, still pointing to sequentially lower prices as any reading below 50 indicates falling prices. 74% of agents said prices declined relative to August and 26% said they were unchanged. Incentives also deteriorated, as our index was up slightly to 28.8 in September from 25.0 in August. 49% of agents said incentives increased, 45% said they were unchanged, and 6% said they declined.

Length of time needed to sell a home increased - a negative indicator for future pricing. Our time to sell index fell to 15.8 in September from 26.4 in August, indicating a longer time needed to sell a home over the past 30 days (a reading of 50 would suggest the time to sell was unchanged). 74% of agents said it took longer to sell a home, 21% said the time to sell was unchanged, and 5% said it took less time to sell a home as compared with last month. We view the longer time to sell as a negative indicator for future pricing trends.

􀁘 "Appraisers are beginning to incorporate short sales and foreclosures into values."

􀁘 "There are no jumbos at reasonable rates."

WCI Communities, Standard Pacific, and Lennar have the greatest exposure.

WCI has the most exposure to the Sarasota market, as it represented approximately 7% of the company's 2005 sales. Sarasota represented 3% of Standard Pacific's sales and 2% of Lennar's sales.

Some Do's and Don'ts We've Learned About Short Selling Your Home.

First of all what is a short sale? A short sale is when you need to sell your home but it will not sell for what you owe the bank AND you do not have assets to cover the short fall. In the past we haven't faced this issue much as homes continued to appreciate. Now though we have had some declines in value and in addition many people have been lured into mortgages with very low payments that were not covering the interest owed so their loan principle balance has been going up while the value of the home has gone down.

In cases like this, if you were to sell the home for less than you owe on it - you would be expected to write a check for the difference at the closing table. Not surprisingly though, homes that were financed to 95 or even 100% of their value tend to be done by folks who would not have assets to put in at the time of purchase and certainly don't have them now that they are forced to sell for a loss. So what do you do?

Well one strategy is to work out with your lender or lenders an agreement to Short Sell the property. That means that you work NOT with the banks collections department but with the team at the bank known as "Loss Mitigation". If you provide the bank with an authorization your realtor can even call the bank(s) on your behalf to try to structure this deal. Some banks though will not have any discussion about selling for a loss while the loan is being paid on time so in fact you may need to be two or three months behind. Also you as a seller will have to prove to the bank that you do not have the personal assets to cover the shortfall - which is what they obviously would prefer. Most banks though would prefer a short sale to taking the house to foreclosure, because they tend to net a greater percentage of what is owed in a short sale.

For the seller why would you prefer a Short Sale to letting the home go to foreclosure? A couple very good reasons. First IF you can negotiate a short sale the banks actually file satisfactions of mortgage even though they did not get paid in full. Second - from a credit report perspective a short sale takes a much smaller "hit" on your credit report (about a 100 point hit vs as much as 250 for a foreclosure) AND it "washes" off the report MUCH sooner. Folks have been able to buy another home in as little as 24 months after a short sale.

Once you have had an initial conversation with your lenders regarding short sale you begin marketing the home, slowly reducing the price until you generate interest and offers. But in the case of a short sale any offer to purchase has to be approved not only by the sellers but by the lenders as well. It's important your realtor makes folks aware of this. This really will add a good chunk of time to the transaction. As I am writing this most lender's loss mitigation departments are BURIED and they give themselves 45 or even 60 days to evaluate the offer you have gotten. They will probably have a disinterested 3rd party do a statement of value to make sure they are getting something close to fair. Once they approve the offer then Buyer and Seller will be given some relatively short period of time (15-20 days) to do all the inspections and arrange any financing etc and get to a closing.

OK so for a seller, if the bank approves, it allows you to sell the property for less than you owe and not have to pay back the difference - so it's pretty clear what the seller's advantage is. But what about a buyer - what's in it for the buyer? Generally speaking, for those buyers patient enough to go through the process, they can get a very good value on a home that also tends to have less wear and tear than what happens to a house that goes to foreclosure and is gaveled down on the court house steps. Foreclosures take longer and in many cases seller and lender are not on amicable terms for the last 4-5 months and the property tends to be "let go" a lot more than a short sale. In our experience banks that can realize 65 to 75% of the value of their loan tend to be open to short sale and that can mean a very good value for the buyer.

What's the risk? First off for buyers they need to know, it DOES take longer and when they do get approval and have a home inspection they can expect that the sale will be AS-IS. Since the bank is losing money and the seller has no money you will not be able to come back after the inspection and ask for ANY repairs. So you need to factor that in to your offer. If upon inspection there is just TOO much work required, be sure your agent has written in a chance for you to get out of the contract and get your earnest money back.

For sellers they need to make sure that they speak with their accountant. There are some cases where the money written off by the bank has been declared "income" to the seller in the eyes of the IRS as most debt forgiveness is - and if the bank is sending you a 1099 for the charge off you could have a tax liability.

And lastly what's in it for the Realtors? Well they get to sell a property that might not have sold at all and they may also get their buyer a very good deal while getting their seller out of a very difficult circumstance. A couple words of warning for Realtors as well. First note that the bank will almost always reduce the commission earned. As a seller's agent you want to make sure in the MLS that you make buyers aware that it is a short sale, added time will be required to get any deal done, that the sale is AS IS and that the commission "split" is subject to adjustment by the lender. This last step is key so as not to create a situation where you've committed to share MORE commission than you will be paid. If everyone understands the ground rules going into the deal than there will be less problems going forward.

So is a short sale right for you? Each individual case is different but for many sellers AND buyers it may offer a real opportunity if managed properly. Be sure you use an agent who has DONE short sales - the cost of being the Guinea Pig while your agent learns this process could be dear.

STRENGTH IN NUMBERS

It's time for supporters of property tax reform to be counted. Gov. Charlie Crist just launched his "Yes on 1" Web site to promote passage of property tax reform, to be accomplished through a proposed constitutional amendment. "While the amendment is temporarily off the ballot, we have every confidence that the citizens of Florida will be voting on tax reform on Jan. 29," says John Sebree, FAR vice president of public policy. "Floridians have suffered long enough and deserve an opportunity to vote for the largest tax cut in Florida history." The Web site asks visitors to join the reform movement and includes a count of the "number of Floridians who support Amendment 1." Help make that number grow by going to the "Yes on 1" Web site, http://yeson1florida.com/.

Don't let this pass you by...if you are concerned about real estate values here in the Sunshine State property tax reform is a MUST. High property taxes along with high insurance rates are the two main factors quoted most often when you read about flight out of the Florida housing market. Stand up and be counted!!! - Mike W