We enclosed our attached screened porch on the back of our house. Our existing A/C unit won’t keep it cool. Will it hurt our resale value if we add a window unit to keep the new area cool?

In most cases yes, a window unit will detract from the value of your property. A much better option may be one of the new mini split air systems that are available both locally and online.

These are permanently installed climate control systems that work well in situations just like yours. Also perfect for mother-in-law quarters, garages or any area that needs additional climate control. No duct work is required making the installation very simple. You will need an A/C contractor to install your system, but the price can be extremely affordable.

For more info, please visit us at . Please email questions to

Does the new health care law really place a 3.8% tax on real estate sales?

Yes and no. The government is now referring to this as an “investment tax” that they claim would only apply to “high income” individuals. However, many folks with moderate incomes that have a large capital gain in a given year may suddenly find themselves classified as “high income” individuals. The sale of a second home, or perhaps even the sale of a primary residence could trigger this high income designation.

Contrary to news stories being circulated around the internet, this tax will be computed based upon your profit and not the sales price of a property. Unless scrapped by Congress, this new health care tax law will become effective in 2013.

For more info, visit

February Update

The news of the day is the relocation of our office this month. We recently executed an agreement to lease our Main Street building to First Florida Bank. That building is 8,500 square feet and was originally built for specific use as a bank. With the vault, drive-thru lanes, night deposit and fire-proof rooms still intact, it was perfect for a bank that needs to move in a hurry.
So, we have moved our office into another building that we own at 725 Harbor Blvd, less than 2 blocks west of our former location. It is just less than 4,000 square feet and is perfectly suited for our use. This building was Destin’s first real estate office back in 1973 and was then called Cox and Young.
We are excited about the new location and the increased exposure we will gain from the Highway 98 frontage. We are easy to find — We are situated directly between Golden Corral and McDonald’s!
Also of note is the fact that Terri and I are ranked as the number 6 residential team in Florida by RE/MAX for 2009. The December stats will not be released until after the RE/MAX Int’l convention next month, so our final ranking may go up or down a little.

The Economic Front

Good news as interest rates continue their downward trend. 30 year fixed rates are now hovering around 4.75%. 5-year ARM’s are around 3.75%.
More good news … There are fixed rate jumbo products (stimulus) in the 5.25% range. These are loans that exceed $417,000 but are less than the established limit for the county within which the property is situated. The individual county limits may be viewed at:

With even lower interest rates and still declining real estate values nationwide, the housing affordability index is off the charts.

So, you would think that with housing affordability at an all time record high, homes should just be flying off the shelves, right?
Unfortunately, the credit markets are still tight and mortgage insurance is still non-existent, with the exception of course of government programs such as VA, FHA, and (Freddie Mac) Rural Housing. Consequently, cash buyers are taking advantage of the best deals out there on the market.
Condo financing (overall) is still about as tight as a vault door. A few portfolio programs are available and a limited number of investors are offering some end-user funding for certain individual condo units. The mortgage market has improved, but it still has a very long way to go.

The Local Trend
January was the fifth consecutive month of increased sales transaction numbers as compared with last year. As you can see from the reports below, single family, residential lots, condos and townhomes are all up.

There was a single $23,519,400 sales transaction for 116 condos at Waterscape on Okaloosa Island that skews the data. It appears to be a partnership buyout, so there is no significant resulting impact on market values.

Increased numbers of distress sales are expected, but 2010 should see continued improvement. Sales numbers are rising and appreciation may be slowly coming into focus.

Why do short sales take so long to complete?

That old adage “garbage in, garbage out”, probably best sums up the problem. The banks and lenders are being inundated with hundreds of thousands of short payoff proposals that don’t stand a chance of EVER seeing the light of day. The offers must fit within certain parameters to be approved. While our personal short sale success rate is more than 90%, the national average is only 25%. Were it not for the 75% “garbage”, the short sale process would be far more efficient and the real estate markets could see genuine recovery much more quickly.

Fannie Mae rescinds 4-property limit for investors

If you turn down Pandora and listen closely, you can hear real estate investors in Chicago cheering all the way from Cincinnati.

Read the Fannie Mae official announcement — you get the sense that the nationalized group is getting with the program. This excerpt comes from the lead paragraph: “Fannie Mae is committed to providing financing opportunities for high-credit quality, bona fide investors. Experienced investors play a key role in the housing recovery.”

The use of the phrases “high-credit quality,” “bona fide” and “experienced” was a conscious one, by the way. Fannie Mae is averse to first-time investors and other foreclosure opportunists. Instead, it wants to serve individuals with a history of owning and successfully managing rental property.

To that end, Fannie Mae will now finance the purchases of one-unit homes for investors with an interest in between 5-10 properties, provided that all of the following guidelines are met:

* 25 percent down payment on the investment property;

* Minimum credit score of 720;

* No mortgage payments late within the last 12 months;

* No bankruptcies or foreclosures in the last seven years;

* Two years of tax returns showing rental income from all rental properties;

* Six months of principal, interest, taxes and insurance reserves on each of the financed properties.

And lastly, to reduce fraud, Fannie Mae will now require all real estate investors to sign a form granting lenders permission to verify supplied tax returns against the official, IRS-filed version. This document is less commonly known as a 4506-T.

But lest we think this guideline change is Fannie Mae’s olive branch to the people, let’s remember that our nation’s banks are holding record numbers of foreclosed homes on their balance sheets right now while the most likely buyers of those homes have been to-date locked out from financing.

Real estate investors want to buy REO, but Fannie Mae had made it impossible. The guideline change is meant to extend banks and lenders a lifeline first; bringing experienced investors back into the fold is just how it’s getting done.

That said, real estate investors are lovin’ it.

For the first time since September, investors can go to auction and know that (relatively) cheap financing will be available from the government. This should speed the reduction of REO inventory nationwide. In addition, with more investors eligible for financing, expect greater competition for prime foreclosed properties, helping to keep home prices from falling into the abyss.

The rollback gives a secondary benefit to investors, too — even those not buying additional property.

See, when the four-property restriction went into effect it was a surprise, 11th-hour announcement made on the Friday before Fannie Mae’s nationalization. This date, meanwhile, has come to be known as the day before the refi boom started.

So, on the following Monday, when mortgage rates instantly plunged three-quarters of a percent, homeowners with five properties or more found themselves ineligible.

They couldn’t refinance their investment homes; they couldn’t refinance their vacation homes; and they often couldn’t refinance their primary homes, either. While rates fell for nearly every borrower class, experienced real estate investors were locked out. Today, that’s no longer the case. “High-credit quality, bona fide” real estate investors are back in the game.

It’s good for them; it’s good for the banks; and it’s good for housing.

Not every bank sells loans to Fannie Mae, however, so if you think the new guidelines will impact your mortgage plans, be sure to check with your loan officer first.

Originally posted at The Mortgage Reports blog

Copyright (c) Dan Green

New rules raise the bar for condo mortgages in Florida

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New rules raise the bar for condo mortgages in Florida

Lending giant Fannie Mae is slapping tough new requirements on mortgages for Florida condos, moves that analysts believe will make it even more difficult to sell units in buildings already starved for residents and struggling financially.The standards, which took effect last week and apply only to Florida, include requiring that no more than 15 percent of a building’s unit owners be delinquent on association fees as a condition of funding home loans to new buyers.

Fannie Mae buys the majority of home loans from lenders, so it wields significant power in the making of mortgages. Fannie-backed loans generally offer the best rates and lowest down payments for borrowers.

The company, wracked with financial problems of its own and in conservatorship with the federal government, said it singled out Florida after a review of its mortgage loans revealed record-high default and foreclosure rates among condo owners. It also cited the excessive number of condos listed for sale, which has driven down prices.

The new rules come at a time when condo buyers already face difficulties getting mortgages. Many banks over the past two years have dramatically pulled back on condo lending, requiring down payments of up to 40 percent in new buildings. Some lenders even have blacklisted condo buildings, citing a high risk of price declines and defaults.

Fannie Mae’s timing ”couldn’t be worse,” said Jack McCabe, a South Florida real estate consultant who believes the region is mired in a housing depression. “This is effectively going to make it much more difficult to qualify.”


The new conditions include:

• No more than 15 percent of unit owners can be 30 days or more past due on association fees.

• For new condo buildings and condo conversions, at least 70 percent of units must have been sold or put under contract. That’s up from 49 percent previously.

• Fannie will have to review condo buildings itself to make sure they meet Fannie requirements — at the lender’s expense. Before, Fannie relied on the lenders to perform these reviews.

Charles Foschini, vice chairman of debt and equity finance for brokerage CB Richard Ellis in Miami, said Fannie was protecting investors, borrowers and taxpayers, as it should in a climate of increased risk.

Borrowers will benefit, he said, by knowing they are moving into a condo complex that is adequately funded and has plenty of reserves, allowing them to predict their monthly expenses.

”From the taxpayer’s perspective . . . the quicker we can instill sounder underwriting practices for mortgages for Fannie or anyone else the more confidence we’ll have in the market,” Foschini said.


But many condo buildings won’t meet those requirements, meaning the buildings most in need of bringing in fresh buyers will increasingly have trouble doing so.

Sharon Dodge, president of the condo association at The Venetia, a 30-year-old building next to the Venetian Causeway in Miami, said about 32 percent of unit owners were past due — more than double Fannie’s new rules.

She described the rules as ”driving the nails in the coffin,” just as the association is making headway on collecting delinquent payments and when sales were finally picking up.

”To have the major source of loans draw a line through us is terrible; it’s wrong and it shouldn’t happen,” Dodge said. “The feds can’t pull the rug out from under us.”


McCabe estimates as much as 25 percent of the market in the tri-county area will be shut out of Fannie-funded financing.

Peter Zalewski, whose Condo Vultures realty specializes in bulk sales of distressed condos, said his figures show that as many as 41 new buildings between the Julia Tuttle and Rickenbacker causeways, and from I-95 to Biscayne Bay, may be ineligible for Fannie Mae approval because they don’t meet the new 70 percent ownership threshold.

”It’s devastating,” Zalewski said.

Fannie is not the only source of funding for lenders who want to make condo loans. But John Bancroft, executive editor with trade publication Inside Mortgage Finance, said No. 2 mortgage guarantor Freddie Mac typically follows Fannie Mae’s lead and would likely implement Fannie’s guidelines soon.

The two companies owned or backed nearly $900 billion in new home loans in 2008, more than two-thirds of the market overall. Ginnie Mae is the major guarantor for FHA and VA loans. Few new buildings had been able to meet FHA certification requirements either, Zalewski said.


Because few lenders are holding loans in their own portfolios, the Fannie vacuum could create new opportunities for cash-rich buyers who will be able to command even greater discounts, predicted Grant Stern, principal broker of Miami-based Morningside Mortgage.

”Fannie Mae declared Christmas for hedge funds who want to buy bulk in these buildings, but it’s leaving everyday investors and people who want to buy for their own personal use in the dust,” Stern said.

Stern added the restrictions further exemplified the self-fulfilling, cyclical nature of the credit crisis because Fannie’s action would bring about further price declines, more foreclosures and potentially more losses for the company.

”It starts with fear, then a reaction. Then the reaction causes that fear to occur, which then confirms the fear and causes a further negative reaction,” Stern said.

© 2009 Miami Herald Media Company. All Rights Reserved.

How is the credit crunch affecting real estate? My credit is not great but I would like to consider buying a house.

The underwriting approvals are tougher today than we’ve ever seen before. On the other hand, we just closed on a property this week that only took 12 days from sales contract to closing. The lender was experienced and knew up front what the underwriters would be looking for. That made a big difference!

If you can go VA or FHA, your odds of success will be greater. Those programs allow for greater debt-to-income ratios and will permit you to close with little or no money down. The conventional markets are much tougher. Plus if you are putting less than 20% down, you will have to qualify for Mortgage Insurance (MI) in addition to your loan. MI approval can actually be worse!

Like everybody else, I want to know if now is a good time to buy?

Yes, that is one of the most frequent questions that we are asked. The answer may surprise you, because it all really depends upon your personal situation.

Prices are VERY affordable today. Also, interest rates are at one of the lowest levels that we have seen in nearly 22 years in this market. In just about every other buyer’s market through recorded history, interest rates have been high. Low rates and low asking prices at the same time? Unprecedented! So, in most cases,  yes, now is an excellent time to buy!

About the only exception that we can think of would be in a case in which you may need to re-sell within the next 18 months or so. Appreciation may or may not not be sufficient to break you even in the short term. Although, in the past month we have seen several instances wherein buyers purchased at way below market values and flipped the properties for some hefty little profits.