Sunday, February 19, 2012

Green Homes - Why Would you build any other way?

Why would you build any other way?

Let's flashback to April 1970. I was in high school and it was the first earth day. I remember a few things about it…. Zero Population Growth…. Save a TREE…. Solar Energy. I was a wide eyed teenager that thought I could change the world and set about doing just that (so I thought). Every hour on the high school PA system I announced how much the population has grown.  At the end of the day we buried a “time capsule” under a tree we planted in the front of the school. I have no recollection of what was in that time capsule - it sure would be fun to see its contents today.

The interest I had in the environment that day has grown to a more mature “what can I do for me and my family and community”  way of thinking. I’m concerned about my grandkids and their future.  Over the years I studied passive solar, was a consultant for biodegradable plastics for a Fortune 10 company, toured recycling facilities, compost plants, and garbage dumps. I have a  Smart Car, a rather energy efficient home, and I have compost bin in my yard and rain collection drum under my gutter.

I learned when I was working in the biodegradable industry two things I would like to share with you.

1. It’s about The Total System. Do you know how they date a land fill?  They bore to the bottom of the landfill and find a newspaper clipping, and then they read the date.  That’s right – newspapers, which is made out of pulp from trees, does not biodegrade in a normal landfill.  So the first thing to tell you is that biodegradability  has to do with the life cycle of the product, not the product. The infrastructure has to be in place. You can buy compostable diapers and they will fill up a landfill just like the non-compostable ones. The answer for going green is in the total SYSTEM, not just the product.

2. The other key thing I learned from my years in that industry is this:  The consumer wants to “go green” and “do the right thing” but only if it will not cost him anymore. That’s right.  If given the choice between two identically priced items he will pick the more socially conscious one - but he won’t pay more for it. Pretty simple.

Years ago the cost of energy efficiency was eclipsed by the low price of energy.  Houses fifty years ago were not well insulated  - why do it? Heat was cheap. Gas mileage?  Who cared? Gas was cheap.

What’s the hottest trend in housing today? Green Homes. 

Green homes consisted, according to a study done by McGraw Hill, of 17 percent of all new home construction in 2011. Green homes are  expected to be between 29 percent and 38 percent of the market by 2016. By value, this works to a five-fold increase, from $17 billion in 2011 to $87-$114 billion in 2016, based on the five-year forecast for overall residential construction.

Surprised?  I’m not. Energy costs have risen and the cost of Going Green has lowered so the two have met at a tipping point that is going to explode the construction market.

Consider this scenario: There are two houses for sale, same neighborhood, same size, similar amenities, same price, but one will have almost no electric bills and the other will have  a $250/month average bill that will continue to increase as energy costs increase.  No brainer right?

Why would you build any other way?

Market America Realty and Investment Group has partnered with Greenergy and is offering Net Zero Energy homes from Orlando to Marco Island. We are finishing our first six models as we speak and have 14 more homes in the plans.

What is a Net Zero Energy home? It is a home, that over the course of a year, will produce as much electricity as it consumes – resulting in a net zero energy cost for the year.  It is a home that will laugh in the face of higher energy costs.

This home  achieves its success through a total system design from the ground up and the sum of all its features make it what it is (key point number one) and an MA Green Home will cost no more than a standard built home (Meets criteria number two above). We have combined intelligent design and total consideration to efficiency with solar electricity generation.

Have you heard the term “blue is the new green”?  The expression refers to the fact that water will be the new money item in the future.  The Greenergy homes address this issue well with rain collection systems and water conservation.

Greenergy homes also are built for a life time – and can withstand 140 mile an hour winds. The unique features (There are about 45 in this list)  are exciting. When I give a presentation on the home, which takes about 45 minutes, most clients after twenty minutes are excited, then theadded features like no VOC carpet and paint, or smart phone monitoring of your home, or rain water irrigation, or the triple gazed windows, are just added bonuses.

I am pretty excited myself. The real estate market has been very tough and full of bad news. This produce is a win-win for everyone and just plain makes me feel good. Good news for us and for you.

Why would you build any other way?
                                                

                                      
Gregg Fous  800-439-1580 ext 52
GFous@marketamericarealty.com

Sunday, February 12, 2012

Lease Options and Seller Financing - How They May Work For You

Lease Options and Seller Financing  - How They May Work For You

 Yes, it’s true, money is cheap these days and a home buyer with good credit can borrow at under 4% for a thirty year amortized loan.  But the economic turmoil over the last five years has taken it’s toll on the credit ratings of many otherwise low risk buyers. They may have a short sale in their history, a foreclosure or even bankruptcy. Many of these buyers will have trouble getting conventional financing today.  What are their options?

Well short of uncle Milton leaving them a pot or cash to inherit they are either shopping for lease options or seller financing.

Seller Financing

Seller financing is an increasingly popular option today for both buyers as well as sellers. The typical seller for a self financed deal will ask 20 to 30% of his purchase price in cash and then take a note secured by a mortgage for the balance.  They in effect, step into the roll normally held by the bank

Here are some reasons they will do this:

·         The return they can get on the note normally is higher than they would get by putting the money into a bank.

·         The offer to hold the note greatly broadens the number of potential buyers that can buy their home.

·         The price they can achieve can be higher thnn if offered traditionally as a cash only deal.

·         It may be possible to sell the note on the secondary market for cash.

Often the seller will ask for the note to “balloon” in three to five years – giving the buyer to improve his credit and financial condition and giving the seller a timeline that he can deal with.

Market America Realty has handled quite a few seller financed deals and can advise you on how to work with you’re a lawyer and even a mortgage servicing company to set one up.

The buyer has interest in buying a seller financed home for the following reasons:

·         While the interest rate may be slightly higher, normally there are no points associated with getting the loan

·         The time needed for credit approval is very short and can normally be accomplished in a few days,

·         He will be able to buy a house that he normally would not be able to afford.  The balloon period gives him a target time to imp-rove his financial conditions.

If you are interested in learning more about selling or buying a home with seller financing, please contact a Market America Realty sales professional.

             

 

Lease Options

The second option I would like to review is called the lease purchase option and it may just be the lease option that will enable a seller to attract a future buyer to their home and enable buyers to afford to  buy in this economy. 

There are three components to the lease option: 

•1.    The Option Agreement

•2.    A Buy Sell  Agreement

•3.    The Lease.

 In most situations the option agreement and the lease are executed (signed) by both parties, and the option agreement will refer to an attached buy/sell agreement and it's agreed upon terms. The essence of this transaction is that the buyer agrees to buy an option to purchase the home at some future date at either an agreed upon price or an agreed upon formula to arrive at a price. This agreement is executed along with a lease for the property. I suggest you use an attorney experienced in lease options to work with you and your Market America Realty agent can suggest a few to consult with that we have had success with in the past.

 Let's look at an example: 

Seller Bob is retiring and wants to move from Fort Myers and sell his waterfront home and move to a smaller, less expensive retirement home.  Bob has two mortgages on his home totaling $600,000 that cost $7500 a month including PITI. (Principal, Insurance, Taxes, and Insurance)  His home has been on the market for almost a year and was originally priced at over one million dollars. He is current on his payments, but his income is well below the $7500/month cost and he is eating away at his retirement nest egg every month he owns the house. 

Buyer Ralph and his wife have a large home that has $200,000 more in debt that the house could reasonably be sold for. Ralph and his wife own their own business, have children and have good income. They have stopped making their mortgage payments. Their credit is bad but their income is strong and steady. 

Ralph agreed to lease Bob's house for $7500/month and pay $20,000 to buy an option to purchase the home in two years.  $2000 of each monthly rental payment will be applied to the purchase price as will the option monies. 

What do Bob and family get?  First of all, they get to move into a house that fits their income for very little down payment. They now have locked in the price that they will have to pay in two years (Keep in mind this is an OPTION, if prices continue to plummet, they do not have to buy - it's their OPTION).  

Bob gets a tenant in his home that will treat the home as his own, he breaks even on his monthly payments - and gets some tax advantages as well at tax return time. 

The option money, by the way, was split between the owner and the broker.  When the home eventually sells the commission will be the same as per the listing agreement, less the commission paid from the option money to the broker at the inception of the lease. There was no lease commission. 

I love a deal where all parties are happy. Bob was happy because he got out from under the drain of cash flow loss. Ralph and his wife are thrilled because they were able to negotiate a good price at today's depressed market values, and lock in a home they love. 

(This was an actual lease option we negotiated on behalf of our clients; some of the details were changed to protect privacy). 

If you are thinking or buying or selling on a lease option, talk to us, we can help. Here are some caveats that you must keep in mind and have your attorney address in the agreements: 

•·       Potential default by the owner/lessor on the underlying mortgage.

•·       Maintenance Items - who is responsible for what.

•·       Amount or rent applied to Purchase Price - if any.

•·       Remedies for default by Lessee.

•·       Insurance and tax issues.

 

Gregg Fous  Gfous@marketamericarealty.com   800-439-1580

Sunday, February 05, 2012

Interest Rates and the Superbowl

Interest Rates and Pricing - The Good News

It’s Super Bowl Sunday today, the only day of the year that, for many, it’s about the commercials. In fact one out of twelve people only will watch for the commercials. A one minute slot on today’s game cost an average of $7 million dollars.

In case you are going to be out looking at Real Estate, I have attached a few of tonight’s ads to preview. Enjoy.

Enjoying the mood and attitude of the Florida real estate market is what I have been doing.  Here is the good news in this market:

1.       Money is VERY VERY cheap.  The  interest rate for 30 year mortgages has now dipped to 3.87%.  (Mortgage Market Survey). Eight out of ten mortgages written today are for refinancing. On a 15 year mortgage you can get 3.14%! The monthly payment on a $100,000 mortgage is under $470 for on a 30 year amortization and $698 for 15 year amortization.

2.       Average prices in key sectors is rising, while the median price continues downward trend. I have included some charts here from Zillow showing that the median price of a home is still trending down., followed by price increase charts.. They are interactive so feel free to work with them. I always take issue with the MEDIAN chart this because this trend is greatly influenced by the type of homes that are being  sold – the cheaper ones. In our office and among my associates we see upward pressure at the bottom (prices are increasing), and still are experiencing some downward pressure at the top.

Lee Zillow Home Value Index

Sarasota Zillow Home Value Index


The following charts  indicate increases in pricing

Lee Homes Increasing In Value

Sarasota Homes Increasing In Value

Have a great day!

Here are a few Super Bowls ads to enjoy:


For more ads go to the Superbowl Ads 2012