My New Blog

There is an old saying on Wall Street that goes something like this……”If everybody is buying and you see news and magazines touting stocks, then sell or go short.  When everybody is selling and the news is gloom and doom, then buy.” 

Though many of you have been in the markets for some time and there are many sayings that can be used as a guideline, my humble opinion is that the above statement is forefront to all investing.  It does not matter if you are investing in gold, soybeans, options, futures, stocks, or real estate.  Human psycology is the same……feer and greed, with fear being a larger emotion and thus downside swings of the pendelum are usually stronger.

Tops in markets are usually attatched to the ”bubble” mantra, yet for those who have traded anything will agree that the quickest yet riskest gains come toward the end of the bubble.  Traders will refer to the technical term of ”parabolic curve”.  Bubbles usually end with a sharp decline lead by an overwhelming inverse of supply vs. demand.  It is only after prolonged periods of time that almost always results in an hyper extended oversold condition.  Thus brings me to this Blogs headline topic……Investment ideas for the Tampa Bay area.

FACT #1. Every investment must weigh risk vs. reward BEFORE entering the trade.  With that said, current prices of many homes on the market are below the cost a builder can construct them for…….at cost of materials and not including land purchase.  That fact alone is the single most important factor that should have every serious investor looking at real estate in the Tampa Bay area.

FACT#2. Builders are not doing “spec” homes on a large scale.  This is obviously due to the slowdown in orders and cancelation of purchase contracts, however simple supply and demand demonstrates that the effective supply of new homes being built is slowing.

FACT#3. Interest rates are at historic lows.  Though we have been in a realative low interest rate enviornment for some time, the fact of the dollars demise over the past 4 years along with commodity prices suggust a very rapid increase in interest rates in the future.  As people become aware of this you can and should expect a very very rapid run on hard assests, ie. real estate.

FACT#4.  Mortgage resets are almost through the system.  I am fully aware that there will be many of you who may disagree on this part and I do welcome your opinion, however the fact is that the 10 year note vs. the LIBOR index suggest that the recent fed cuts have tampered any mortgage resets in the immediate future.  Based on this, most homeowners or investors who were squeezed out by the initial resets will most likely be worked through the market either through short sales, forclosures, or market purchases.

FACT#5.  There is currently brand new homes being offered by builders and investors at prices below cost.  This is a phenomenon that must not be overlooked.  The sheer fact that any investment in real estate also carries reserves for replacement costs, maintanence issues, etc. should illustrate the benifit of buying brand new vs. a home 20 years old.  Also most builders are giving a waranty that defreys costs to the investor for at least a year.  Economic life plus depreciation clearly favor buying these homes now.

FACT#6. Banks are getting tighter on credit and thus less people can buy…..so they MUST rent.  In the comming months I would expect to see a surge in the rental demand market as people are forced from homes and left with only two options…..rent or live on the street.  It will be only a little while until there are multiple offers to rent a property vs. the current enviornment now of lease/option with a helicopter unrealistic attitude.

FACT#7. Builder stocks have almost doubled from their recent lows and are the top performing group in Q1.  Going back to my Wall Street past, it is a common knowledge that Wall St. is usually 6 to 9 months ahead of main street.  Thus when a sector is trending up in price in the wake of bad news being reported on the headlines, it usually indicates a favorable enviornment is on the horizon.

FACT#8. The best deals are going “PENDING SALE”!  I want to make clear that YOU MAKE MONEY WHEN YOU BUY REAL ESTATE….not when you sell.  The single most important thing in real estate is the PRICE OF YOUR INITIAL PURCHASE…period.  Seasoned and experienced investors are speeding up their purchases of the best deals on the market.

FACT#9. When you hear that housing has turned and numbers are up……YOU ARE SEEING WHAT HAS ALREADY HAPPENED!  Housing sales are past numbers…not forward indicators.  By definition the amatuer investor will always be late to the upward move because of relying on news reports and media.

FACT#10. There are professional Realtors who know the market and will assist you as a designated Buyers Agent!  The best thing about being a real estate investor in Tampa now is the willingness of knowledgeable Realtors who can assist you in their perspective markets.  Who better knows the market that the person who lives and breathes it everyday.  And most buyers agents get paid from sellers proceeds……..WOW talk about having it all for a buyer now!

Well that concludes my humble analysis of why now is the time to consider investing in Tampa Bay.  Call me on my direct line at 727-403-9933 if you have any questions.

Sincerely,

Damon Desautel

Beware of the snakes out there not acting in your best interest! New Bill passed to protect the homeowner against fraudulent activity. As I said before, use a licensed professional when dealing with these sensitive situations. Please Read:

Almost as soon as she found out her lender had filed foreclosure, Deneen Whitley began getting phone calls, letters and pamphlets from foreclosure rescue services offering to save her Cutler Bay home from the clutches of the bank.

Whitley has resisted the offers so far, mainly because she's heard of people losing their homes after using such services. The temptation lingers, though, as the foreclosure clock keeps ticking with no resolution in sight.

''I have thought about it,'' Whitley said.

In an effort to protect the growing number of homeowners in the same situation, the state Senate approved a foreclosure fraud bill Thursday, reining in the growing field of consultants and equity purchasers offering home-saver services to delinquent borrowers. Some have been accused of duping homeowners into signing over their property and then selling for profit or charging them stiff fees to get it back -- a scheme sometimes called equity stripping.

Sen. Mike Fasano, R-New Port Richey, one of the bill's sponsors, said the legislation would help bring transparency to the foreclosure rescue business. The bill passed the House earlier this session. Gov. Charlie Crist is expected to sign it.

The bill requires foreclosure rescue companies to provide disclosures in contracts, including the fact that a homeowner may be selling his or her property.

Homeowners also would get a day to consider a contract before signing it, as well as three days to back out of the agreement. The new requirements stem from homeowners' complaints of being rushed into signing contracts they didn't understand.

''When you have people who are desperate to save something of such value to them, you have scammers and con artists trying to take advantage of the situation,'' said Sandi Copes, a spokeswoman with Florida's attorney general's office.

The attorney general has received 1,800 complaints about mortgage and foreclosure fraud in recent years, and is investigating four companies, Copes said.

In a typical rescue scheme, an investor offers to pay up the delinquent amount on someone's loan. In return, the homeowner agrees to sign over a deed in a lease buy-back arrangement.

In some cases, foreclosure rescuers have been known to take out large second mortgages or home equity loans on the property, making it impossible for the homeowner to repurchase.

Before entering into a lease buy-back agreement, investors would have to demonstrate that the homeowner has a reasonable ability to repurchase the property.

In addition, foreclosure consultants, who often take money in exchange for help dealing with lenders, would be banned from accepting payment before promised services are performed. .

Copes said the bill also enhances civil remedies for homeowners under the state's Unfair and Deceptive Trade Practices Act.

Please call me for a no obligation consultation..I will represent you in your best interest!! 727-403-9933

Damon Desautel, CR Realty

You are not alone in this mess of a market we are in today. The number one rule is to find someone qualified and licensed to handle your situation. There are many people that will make many promises and ask you for money up front to handle your case. Do not give them a dime.......you will be out the money and be in the same situation after the fact. Here are the top ten seller questions about short sales.

Number 10

I can't make my house payments, but I do have an ability to pay back all or part of the negative equity. Also, I want to preserve my credit score...is a short sale right for me?

Probably, not. In cases where the seller can pay back all or part of the negative equity (usually to the 2nd lien holder), it makes sense for them to work out a repayment plan. The lender will then release the lien and allow the home to close.

Number 9

If I pay mortgage insurance and default on my loan, why wouldn't that cover the deficiency amount?

The mortgage insurance is not there for your protection, just the mortgage lender's.

Number 8

Do I have to have my home "Approved" by the lender prior to offering it for sale as a short sale?

No. Technically speaking there is no such thing as being "Short Sale Approved." The actual approval only happens with an accepted offer.

Number 7

I just missed a payment and I know I will miss more...how long does the foreclosure process take and is there time to do a short sale?

The foreclosure process takes differing times depending on your state.  In the Midwest a foreclosure can take over a year. In California its taking 6+ months.  Generally speaking a well priced short sale being processed by an educated short sale listing agent will sell and close in less than 120 days.

Number 6

Will I still have to pay property taxes if I do a short sale?

Property taxes will always have to be paid as part of any accepted short sale. Whether it's you or the lender, it depends on their policies and the specific agreement you reach while negotiating the short sale.

Number 5

I owe more than my home is worth and I can't make the payment. Do I have to somehow qualify for a short sale?

The simple answer is NO. If someone can't make their payment and they are otherwise insolvent, they qualify for a short sale. Note: insolvent simply means their total debts are great than their assets.

Number 4

Do I have to pay income taxes...I have heard that I will get a 1099. Will the loss the bank takes be treated as a taxable gain to me...the seller...is this true?

It WAS true, now it's not. Consult your Tax Attorney or Qualified CPA.  Very recently the tax law was modified and now most people who do a short sale will have no taxes due.

Number 3

How do you, my listing agent get paid...who pays your commission?

The bank will pay the commission along with all the other usual closing costs.

Number 2

Do I have to miss a payment to do a Short Sale?

No. Late last year most major lenders started accepting short sale offers from sellers who have never missed a payment.

Number 1

I want to do a short sale and have a 2nd mortgage, does this make me ineligible?

No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1st and 2nd lien holders.

• Mortgage Insurance Tax Deductibility. This bill makes mortgage insurance premiums tax deductible for all mortgages originated for the next three years. Mortgage insurer Genworth Financial estimates that this tax break is worth $350 to the average taxpayer who has purchased a home with less than 20 percent down.

• Terrorism Risk Insurance Act. Federal backstops for terrorism insurance, passed initially after the Sept. 11 attacks, have been extended for another seven years. The bill also expands the program's protection by including domestic terrorism. The insurance and real estate industries have pushed for an extension, saying federal guarantees to help cover catastrophic losses are crucial to stimulating the investment needed to spur economic growth.

If you are behind on your payments, call me for a free consultation so we can discuss the short sale process in person before foreclosure happens. Call Damon at 727-403-9933.

Interest rates have moved down along with bottoming home prices...... if you were wondering when the time is...article from DC...

WASHINGTON – Nov. 30, 2007 – Mortgage rates fell sharply this week with rates on 30-year mortgages dropping to the lowest level in more than two years.

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.10 percent. That was down from 6.20 percent last week and was the lowest rate since the week of Oct. 13. 2005, when rates stood at 6.03 percent.
Analysts attributed the decline to increased worries that a severe slump in housing and a continuing credit crunch could drag the economy into a recession. The recent turbulence in stock markets has prompted many investors to rush to the safety of U.S. Treasury securities, driving down the yields on bonds.

“Interest rates for U.S. Treasury securities have been drifting lower this month over market concerns that the housing slump and stress in the credit markets could slow future economic growth,” said Frank Nothaft, Freddie Mac’s chief economist.

Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, slid to 5.73 percent, from 5.83 percent last week. This week’s rate hasn’t been lower since the week ending Jan. 26, 2006, when 15-year rates averaged 5.70 percent.

For five-year adjustable-rate mortgages, rates edged down slightly to 5.86 percent, compared with 5.88 percent last week.

Rates on one-year adjustable-rate mortgages edged up slightly to 5.43 percent, compared with 5.42 percent last week.

The mortgage rates do not include add-on fees known as points. Thirty-year, 15-year and five-year mortgages each carried a nationwide average fee of 0.5 point. The one-year ARM carried an average fee of 0.7 point.

A year ago, 30-year mortgages stood at 6.14 percent. Rates on 15-year mortgages were at 5.87 a year ago while five-year ARMS averaged 5.95 percent and one-year ARMs were at 5.46 percent.

A fairly consistent rule of thumb when purchasing real estate:

"Buy when there are less buyers and more sellers such as now and sell when there are more buyers than sellers."

This is the question on everyone's mind these days when it comes to housing. Its no secret that there is a dilemma in the housing industry across the country. Some speculators say we are presently "bottomed out" and a rebound is eminent by the end of the year, others say the bottom has not hit yet. So the question is, what do I do? This is what I tell my clients.... everyone must make the decision based on their own situation. For instance,

If you need a place to live, you should probably buy. Everyone needs a place to live and the key to buying in this market is to buy right. Use a Realtor to help you make an informed decision. Ask to see the comparable sales in the area and take a drive by them or view the inside of the home if at all possible. Make a note of the cost of any repairs that the home may need. Check on insurance costs and estimated taxes of the home before making an offer. To get the great deal, ask your realtor to investigate some things for you such as: the motivation of the seller if possible, mortgage balances, date of purchase, days on the market, etc. All of the factors could influence the offer price of the home.

If you are looking for an investment, make sure you are making an informed decision when making a purchase. The days of buying and flipping have slowed down although it is still possible for the seasoned investors. It is a good time to buy and hold....Take any point in time relating to real estate, wouldn't you say to yourself ......" I should have bought that 10 years ago, wow, how much equity I would have now!" I know I have, heck, even 5 years ago!!

The point is..... buying is always better than renting as long as you are making an informed decision. When you include the tax benefits along with the appreciation whether long or short term, it always a good investment to own your own home, not to mention the pride of ownership that is included in the sale!! As for the investment purchase, if you are going to buy and hold, it is always a good time to buy as long as the numbers work to your advantage. If you dont believe me, here is a Q and A to billionaire Donald Trump.

James’s winning question . . .

“Real estate has been regarded as a solid and safe investment over a long- term period. Most rich people have created a lot of their wealth by placing their money in property. Do you feel that in the future, there could be another investment that can replace the advantages of real estate? Or do you feel that the power of real estate investing can have no equal?”

And the answer from Donald J. Trump . . .

“One thing to consider is that the earth has a finite amount of land. That makes it increasingly more valuable. Manhattan is an example of how valuable a parcel of land can become. Technology can also be very profitable, but it can also go bust. There are risks in everything. I’ve had good luck with real estate and I understand it, so I am prone to believe it’s a good investment.”

For free information or if you have any questions feel free to give me a call on my direct line at 727-403-9933. I look forward to hearing from you!!

It’s no secret that foreclosures are on the rise as a result of the turmoil in the mortgage industry. But if you’re considering jumping in on a foreclosure auction, there are a number of things to watch out for.

First of all, be aware that there are two kinds of auctions: Ones run by the sheriff’s department after a borrower doesn’t make payments, and others run on behalf of lenders by auction houses. Lenders often take back ownership of properties in default at sheriff’s auctions if there are no other bids and try to sell them at auction to recoup the mortgage balance.

The auctions run by sheriffs can be a tough place for a newcomer since you often have to pay for most or all of the price right away in cash or certified check. In the other kinds of auctions, you’ll have a chance to line up mortgage financing, but it’s a good idea to be pre-approved.

Ralph Roberts, founder of a Detroit-area brokerage Ralph Roberts Realty, and co-author of the book “Foreclosure Investing for Dummies,” recommends that potential buyers do lots of research on the property ahead of time, including a trip to city hall to look up public records at the building department to see if there are any outstanding building code violations. You can also pay for an appraisal, which usually goes for about $350 or so.

Even more important, Roberts says, is deciding ahead of time what is the maximum amount you’re willing to pay for a certain home and sticking to it.

Another good idea is to bring someone you know and trust on the auction day itself, just to make sure you don’t get carried away in all the excitement and exceed your maximum price.

“People get trapped and bid too much because they caught up the word ‘foreclosure,’” Roberts said. “They think it’s automatically a good deal, but it could turn into a money pit.”

Among other things to look out for, you’ll want to see how long the home has been vacant to make sure it’s not run down, whether it’s had a termite or rodent problem and whether there are any outstanding code violations against it, such as an addition to the home that didn’t meet city code. In some cases, you can’t have an inspection beforehand.

Then there’s the question of a “reserve.” Some auctions have them, some don’t – so be sure to check beforehand if there is one, or if there is a provision saying that the final sale is subject to the seller’s approval.

In an auction, the “reserve” is the minimum price that the seller is willing to accept, but the tricky thing is that you won’t know what that price is until someone bids it at the auction, in which case the auctioneer will announce that the reserve has been “met,” meaning that the sale will definitely occur. If it isn’t, the sale will likely not occur. The other kind is an “absolute” auction, where the best price will be guaranteed to win.

Online: The Federal Housing Administration has a detailed explanation of foreclosures on its Web site: http://www.fha.gov/foreclosure/index.cfm

For more information on purchasing a foreclosure, feel free to contact me on my direct line at 727-403-9933.

1. Selection, selection, selection. There are over 86,000  homes listed since Jan 1,2007 in Tampa/Clearwater/St Pete area with just over 23,000 sold. Regardless of the price range a buyer desires, there are plenty of houses from which to choose. Just a few years ago the total resale inventory dropped below 5,000 units. A buyer was forced to make compromises if they were going to locate the home of their dreams. There is a great selection of attached homes, condos, and townhouses. You can find large lots, small lots, and a lot that will accommodate your boat or RV. There are lots of options in this market.
   
   
2. No Bidding Wars. In 2005 we had one client that made an offer on ten homes. They lost the first nine to the 'feeding frenzy' that existed. Other buyers bid the properties up substantially from the original listing price. There were escalation clauses where buyers authorized their agents to outbid other offers by thousands of dollars. There is no competitive bidding in this buyer's market.
   
   
3. You can make an offer. A few years ago when you made an offer, the only question was how high above the list price could the buyer reach in hopes of being the best offer on the table. Today the sell price list vs. price ration is about 96%. A seller will not be insulted if you 'make them an offer they can't refuse'.
   
   
4. Patience is tolerated. In the hot seller's market that existed everything was rushed. Find a house before other buyers did. Hurry up and make the offer.  Today a buyer can take their time. Look at several homes and think about your decision for a few hours.
   
   
5. Due diligence is welcomed. In this market a buyer is encouraged to obtain a home inspection, termite inspection, and appraisal. In 2005 many buyers waived these contingencies in order gain an advantage with multiple offers.
   
   
6. There are plenty of specs. In the not too distant past buyer had to 'play games' if they wanted a new home. There were lotteries and waiting lists in order to obtain new construction. Some buyers slept in their cars in order to get to the head of the lines. R.L. Brown estimates that builders have thousands of specs ready for immediate occupancy.
   
   
7. Repair requests are welcomed. After a buyer completes a home inspection, they are allowed to submit a repair request to the seller. In the past a seller might insist the home was sold 'as is'. Many times, there were back-up buyers waiting for a primary buyer to upset the seller whose home was increasing in value almost daily.
   
   
8. Few, if any investors. It is estimated that one third of all sales in 2005 were to investors. These non-owner occupied buyer caused the market to inflate and affordability to decline. Mortgage fraud became commonplace. It's a great time to buy without having to compete with hundreds of prospective landlords.
   
   
9. Location, location, location. Today's buyers can find homes closer to work. In the past buyers flocked to Maricopa and Queen Creek in order to find affordable homes. In this market, reasonably priced homes are within biking or walking distance to schools, rapid transit lines, and relatives.
   
   
10. Real Financing is available. The 'wink, wink' zero down, no doc, adjustable, sub-prime loans are gone. Fixed rates are back. FHA financing, first time homeowner bond programs, special loans for teachers, and police officers are back in business. It's a great time to buy real estate!

1. Asking Too Much

How should you set the price? Gone are the days when you can expect to sell your home for more than your neighbor did last year. Single family home prices have fallen for three consecutive quarters and are now down 6.5% from their peak in 2006, according to the National Association of Realtors. So rather than looking at how much homes in your area sold for six to 12 months ago, compare prices for similar properties currently on the market. If you see a listing for a house that's just sitting unsold for a few months, chances are the owners are asking too much and you'll want to set your price a bit lower, says Corbett.

Click here for more help on setting the right price.

2. Questioning the First Offer

The reality is that in any market a home's first offer is often its best, says Elaine Clayman, a real estate broker with Brown Harris Stevens. She says that's because educated buyers will pounce on a property they like -- with a competitive bid -- as soon as it comes onto the market. And don't forget that the longer a home sits unsold, the greater chance a seller will have to reduce his price to sell.

3. Not Responding to All Offers

Watch our video for more advice on negotiating.

4. Using a Home Stager

Watch our video for more techniques on how to stage your home.

5. Picking the Wrong Buyer

Next, watch out for buyers who need to add contingencies to the contract, including a clause stating that the deal won't close until they sell their own home. A better bet is to look for cash-flush first-time home buyers or someone who has already unloaded his existing house. In a slowing market it's difficult to estimate how long it could take your buyer to find someone to purchase his dwelling, warns Brown Harris Stevens' Clayman. And if that property doesn't go for as much as he expected, that person may no longer be able to afford your agreed-upon price.

For a no obligation consultation and free market analysis, call me at 727-403-9933. I will sell your home!!!