Real Estate Kingdom

Just like most investors you are looking for the best real estate deal that you can find. In order to do this you have to look at all real estate marketplaces. I have found that in my experience the real estate market place that has the most confusion is the sheriff sale. There is not a lot of information on the sheriff sale and it can be pretty frustrating to a investor who is just starting out. I wrote this article to clear up a few concerns that a new investor may have. My experiences may help guide you in the right direction or at least identify the right questions to ask when you start to look into sheriff sales.

You are bidding on foreclosed property that went through the whole foreclosure process and it is now available for auction at the courthouse. The properties that you are bidding on have usually taken some time before the foreclosure process is complete. That means that most properties have been vacant and depending on the area may or may not have been winterized. In a lot of cases these properties will have been vacant for a considerable amount of time. In some cases a year or more. In a year a lot of things can happen to a property. It is not a bad idea to assume the worse when figuring what it is that you want to bid on a particular property.

For example the lack of winterization can completely destroy existing plumbing in cold weather climates. And the fact that a property stands vacant can ruin landscaping and other features of the property without the proper maintenance. I find that it is a good idea to include the worse case scenario in your estimates so that you can conservatively come to a estimate that keeps you, as the investor, financially safe. The reason that I take the conservative approach is the fact that you are not able to see inside of the properties that are on the sheriff sale. You will be able to drive by the properties but there is no showing like you would normally see in a property that is for sale by a real estate agent for example.

So basically you are bidding blind. You will not know what is in the property until you actually buy the place. I have been both pleasantly surprised and disappointed in properties that I have bought on sheriff sales. Some properties that are bid on may have people living in the property. They may be tenants or the previous owners or the actual owners of the property. These people are a great source of information to you as the real estate investor. In most cases I found that they are more than willing to talk about the whole situation. In some cases the property owner may even work out a deal with you before the property actually goes through the sheriff sale. This is a great situation for you because you don't have to bid against anyone to get the property.

In summary you may not know exactly what you are bidding on in a sheriff sale. I found that it is a good idea to keep all estimates conservative. This way you will have at least have a buffer zone to work with if there are any unforeseen problems that may arise.

The conditions in the housing market front in Florida, and much like in most of the regional markets in the US is a complex, but not hopeless one. The main concern is that real estate property values today have skyrocketed, and property taxes increased as well with them, and most local governments spent it.

The fate of Florida homeowners who are protected by the Homesteaded act, or Florida's Save Our Homes constitutional amendment, saw only minor increases. However, even these quite trivial increases were viewed as truly unfair by non-homesteaded homeowners who are now bearing the brunt of this new development.

For the city of Miami, it's a tough season, as well. With buyers choosing to stay on the sidelines for the moment, most property developers from Brickell, Aventura, Sunny Isles, North Miami, Fisher Island and other areas are finding ways to sell their units, to help them overcome their investments. However, not all is lost, as the state and federal governments have enacted new measures to save faltering homeowners, and flailing property developers as well.

The Florida Property Tax Amendment: What Awaits Homeowners

In January, voters in Florida were presented with a set of amendments to decide upon, which could be effective in rescuing many homeowners from defaulting on their mortgages, and among the possible solutions were: A constitutional amendment approving property tax portability; A citizen's amendment being endorsed by Florida state House Speaker Marco Rubio; An amendment that will be created by the state's Taxation and Budget Reform Commission; and new regulations created by the 2008 Florida Legislature that will expand the property tax reform laws passed during a June 2007 special session.

How Home Sales And Mortgages Are Faring Today

Mortgage lenders thought their risk was limited due to rising home values. It was ok if a homeowner put no money down because if he lost the home to foreclosure, banks recoup their investment and possibly more if the home went up in value. However the lenders' risk increased when home prices started to decline, even on mortgages issued under the old rules.

The state of Florida, along with a handful of other states seemed to find itself at the center of this real estate slump.

According to the October monthly sales report provided by the Florida Association of Realtors, they reported the year-over-year number of home sales fell 29%, even though home prices only lessened by around 8%. At present, the states home sales figures compare favorably to that of five years ago and the housing prices have actually shot up more than any other state, with exception of Hawaii.

Housing analysts in Miami, and in the whole of Florida as well, are hopeful that the new year will bring a generous inventory for home buyers to effectively choose from, and they note that the demand exists, however many of these prospective buyers are fearful that prices will slide a bit more, so many prefer to sit an wait it out. While that cautious view may stem more from anxiety than actual fact, the market will change direction, slowly and stubbornly, but on its way back to normal levels.

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The term "points" is used to describe certain charges paid to obtain a home mortgage, typically the origination fees on line 801 of your HUD settlement statement and/or Loan Discount points on line 802 of your HUD settlement statement.

You can deduct the points in full in the year they are paid, if all the following requirements are met:

1. Your loan is secured by your main home (your main home is the one you live in most of the time).
2. Paying points is an established business practice in your area.
3. The points paid were not more than the amount generally charged in that area.
4. You use the cash method of accounting. This means you report income in the year you receive it and deduct expenses in the year you pay them.
5. The points were not paid for items that usually are separately stated on the settlement sheet such as appraisal fees, inspection fees, title fees, attorney fees, or property taxes.
6. You provided funds at or before closing, that were at least as much as the points charged, not counting points paid by the seller. You cannot have borrowed the funds from your lender or mortgage broker in order to pay the points.
7. You use your loan to buy or build your main home.
8. The points were computed as a percentage of the principal amount of the mortgage, and
9. The amount is clearly shown on your settlement statement.

Aaah, Location, Location, Location! Ask any real estate agent what this means and you will get as many answers as there are types of houses. You'll also get answers framed according to the houses they are currently trying to sell but that is another subject.

While my comments deal primarily with new homes, the comments are just as pertinent for resale.

New Home sales typically involve a sales office, a couple of model homes and vast expanses of mud where dream houses will arise (eventually). Buyers will spend hours and hours and hours poring over choices of exterior and interior materials; they will spend a great deal of time selecting trim and finishes; family and friends will help them pick appliances perhaps even changing layouts. In short, they invest considerable time and energy in defining what the house will look like, inside and out.

Conversely, Buyers will spend only a few minutes looking at site plans and then spend months imagining their ideal home sitting on the selected lot. Buyers all but ignore exactly where the house will be situated within the development and what this will mean for the future. If buyers would spend more time in selecting which lot their dream home will be built on, they will greatly improve the enjoyment they get from living in it and dramatically boost resale value in the future. Do I have your attention?

A. Look at the site plan, focus on the existing roads outside the development and how these will connect to the new development. In my case, a development of about 130 homes with just two roads that connect to the outside world, and one of these is only for traffic heading in one direction.

If you are looking to buy a house on a lot close to where the development connects to existing roads, consider that you will have proportionately more traffic passing your front door than those deeper in the development. Consider also that during the period the development is being built these roads are the means for construction vehicles to get in and out of the development. These large vehicles are magnets for creating mud puddles in the rain and dust clouds in the summer.

If you are looking to buy deeper in the development; are the interior roads like a rabbit warren? Will you or others be able to find where you live easily? Will your children have a trek to get to the school bus pick up point?

No matter where in the development you plan to buy; consider that the roads are unmaintained and likely minimally signposted until the town takes responsibility; over time, other home owners will begin to forget that the roads are public places, they will ignore stop signs, parking signs, etc. since during construction - everything is abnormal.

B. Look at the site plan, focus on lots that abut intersections in the development - most intersections will be stop sign posted in one or more directions. Picking any lot within three/four homes of the intersection means that you will have to be very quick and very effective at backing your vehicle in or out of your driveway. Picking such a lot means that your guests who cannot park in your driveway will have to park somewhere else. Picking such a lot means that you will see and hear much of vehicles that have trouble navigating intersections.

When the intersection is a T junction style; consider this - if the lot you are interested in is at the top of the T, any and all traffic at night coming up the T will have you full in their headlights until they turn. If you are interested in one of the lots where the lines of the T join; depending on which way vehicles turn, every vehicle that makes the turn at night will bathe you in the glare of their headlights for a few moments.

If you have or plan to have children, lots close to intersections are not the best and safest place to have your children outside enjoying the fresh air; far too many intersections in developments tend to have limited sight lines around corners.

C. Look at the site plan, focus on where the sidewalks will be, where the utility poles and junction boxes will be. If the plan does not show these, ask! While utility poles and junction boxes may not seem like much; having a three foot by two foot by four foot transformer substation abutting your property might intrude on your landscaping ideas. Sidewalks present similar problems and more.

The home owner does not own the sidewalk and does not own the land between the sidewalk and the road - this strip of land cannot be landscaped, cannot be equipped with underground sprinkler systems and cannot be policed to prevent dog abuse. One neighbour of mine asked a dog walker to refrain from allowing her dog to pee on his strip of land since female dogs destroy any grass they pee on - her response, its not your property, I can do what I want!

D. Look at roads that curve, in cases where the curve is quite severe, traffic approaching the curve will shine their headlights on houses aligned with the road.

If the lot is on the outside of the curve, getting in and out of the driveway will be a nightmare; on the inner side of the curve, reduced visibility.

In summary: Look at the site plan, try to imagine a 3D view of what the development will look like when it is finished. Look at the lot you are thinking about - imagine cars whipping along the roads, imagine traffic patterns, imagine what the landscaping and sidewalks will look like.

If you can imagine and like what you see, you will at least be prepared for what might otherwise be unpleasant irritants or surprises that did not occur to you when you signed on the dotted line to take possession of your dream home.

While this article is not a usual subject for me, I hope you found it useful.