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One and a Half Ways to Kill a Sale?

I don't like warranted item repair or WDO repairs.  Why?  Most sellers list price properties based on the condition of the home and on other comparable properties.  This clause inserts a percentage into the contract, pre-printed I might add, of 1.5%.  A good portion of my own sales are older homes with a variety of cosmetic and code issues.  These homes often were built to code or prior to code requirements and the inspections, while accurate, often have the effect of creating an adversarial atmosphere between the selling and listing sides.   That 1 1/2 percent often becomes a point of contention.  

Our standard contracts are worded with a 1.5% repair and 1.5% WDO amount written into the Seller's side of the transaction.  In my experience, many sellers assume, even if it might not happen, there will be repair requests for close to the 1.5% amount.  In other words, if the home does not need repair or if the buyer doesn't go ahead with the inspection, the Seller often priced the possible request into the accepted offer.  Counter-offers ensue and haggling over what is or is not a warranted item.  I far prefer "as-is" right to inspect.  This doesn't actually make the sale an "as-is" sale like the contract you might have seen 25 years ago.  It allows the buyer to inspect and then the right to withdraw if they find something they truly don't like.  Usually a dollar threshold  is attached.  I personally prefer no dollar amount and simply giving the buyer the right to withdraw within a reasonably short time frame.  This is closer to the way a commercial transaction is handled.  Often commercial sales have a due diligence or "look" period during which the buyer is allowed to withdraw. 

Essentially, you are telling both parties exactly what you will or won't do and make both parties aware that anything both don't expect will open a second round of negotiation.  Give the buyer a chance to verify the condition.  Not only does this allow a buyer to find anything unexpected, it passes some responsibility to the buyer and reduces the chance of a future lawsuit.    

I want to add a short disclaimer.   This article is an opinion only.  I have my own way of doing things and often see my way as the best way.  In more than 20 years as a broker, this is the easier way to handle a sale, in my opinion.  I feel negotiating "up front" is better for everyone involved.  A 1.5% cost you may or may not pay...creates a difference of opinion more often than not.

Newest Subdivision Quality Listing

This is my newest listing.  With approximately  5.39 acres, a good deal of planning was underway when the market turned.  Now,

drastically reduced, this property is priced to sell in the current market.  This should be ideal for a builder/developer looking for a project ready for next summer/fall. 

Call me if I can help or answer any questions. 

5.39AC PHEASANT LANE

List Price: $849,000
Acreage

Undivided land at the end of Pheasant Lane. Much of the work for this was completed by an engineer and then paused as the market changed. Priced to sell, this could be ready for construction about a year from now. Sold as is...improvements to be made by buyer.

 

Nassau County Buyer Handout

Florida offers Help with Downpayment

  This is a great step toward correcting the inventory here in Florida.  After 9 months of "better than last year" statistics across the state and an increase in the statewide median price for resales, this is yet another good sign.  The link below goes directly to the Orlando Sentinel article. 

On another note, I'm noticing far more activity here on the island.   The impression I have is that the average buyer is beginning to feel the bottom is here or just passed.  Everyone is starting to look around and think about the opportunity to buy in while prices are down, sellers are pricing to sell and interest rates are down.  Rare opportunity?  Maybe.

Starting Wednesday, Florida hopes to stoke its real-estate market by becoming one of the few states to offer $8,000 in down-payment assistance to qualified homebuyers so they can benefit upfront from a new federal tax credit.

Florida offers help to some with home down payment - OrlandoSentinel.com

Florida Ranked Consistently High and Why Real Estate Should Recover More Quickly Here

 

It is interesting to look at a glass half full instead of half empty.  The South Florida real estate market seems to be such a separate world from our little corner in NE Florida.  We see a different demographic, growth rate, and I hope recovery rate.

Growth will, in my opinion, save us.  As the baby boomer generation retires...beginning only a few years ago...we will see a continued migration here.  We have one of the best standards of living, best climates, best environment for business, best beaches, best pretty much everything.  That said, there are almost three Floridas.  South Florida is distinctly different than North Florida.  Inland and Beaches all over Florida are very different.   Growth all over Florida is going to continue.  Nassau County, bordered by Jacksonville to the south with 20 times (roughly) the population, is a far nicer place to live.  We are, more often as years pass, becoming a bedroom community for Jacksonville and King's Bay. 

Coming trends, including fuel price increases, virtual offices and green living all point to an area like Nassau.  We have the beaches, we have great values on property, you can live and do all errands within about 10 minutes of home and in come areas can walk or ride a bike for everything.   This is one of the easiest places in the world to live.  Oh, and don't forget the short drive to Jacksonville International Airport...only about 30 minutes away.

Lets consider a few opinions:

• “Top State Business Climate.” Florida’s business climate ranked 4th among executives and 6th overall on Site Selection magazine’s 2008 Top State Business Climate rankings. Read more.

• “Best Tax Climate for Business.” Florida continues to rank among the top five states for best tax climate for business, according to a Tax Foundation survey. With no state income tax, low corporate taxes, a low unemployment insurance tax rate, and sales tax exemptions for certain business transactions, Florida has remained among the top five U.S. states since the survey’s inception. Read more.

• “#1 in Online Education.” Florida ranks top in the nation in online education, according to the Center for Digital Education, which evaluated each state’s vision, policies, programs and strategies to transform their academic environments to meet student needs. Read more.

• “Best Colleges and Universities.” Florida colleges and universities were ranked among the best by several national surveys. For instance, six Florida universities, including University of Florida at No. 2 and New College of Florida at No. 8, were named to “Kiplinger’s Best Values in Public Colleges.” These rankings recognize schools with top-flight academics and affordable costs. The University of South Florida's graduate entrepreneurship program was ranked No. 5 in the country in the 2008 ranking from The Princeton Review and Entrepreneur Magazine. Read more.

• “Top Ranked High Schools.” Florida leads the nation in Newsweek’s “Top 100 U.S. High Schools,” accounting for nearly 1 out of every 5 of the top ranked schools as measured by the magazine’s Challenge Index. Read more.

• “Top Biotech Region.” Florida was named a “Top 5 Region for Biotech” in 2008 by the industry's daily monitor, Fierce Biotech. This is Florida's second consecutive year at the top of this ranking for regions supportive of biotech development. Read more.

So, the next time you think about Florida or about Nassau County...think about just how much we have going for us.  We're far better off still than just about anywhere else in the country...and I'd be hard pressed to find anywhere else in the world with the same quality of life here on Amelia Island. 

Foreclosures Drop

The article is interesting.  See the link below for details, but I think the key to a recovery will be dealing with foreclosures and their effect on  current sales.    In the past, distress sales like foreclosures were excluded from comp lists. 

Is this fair?   The only benefit is a more stable portfolio of loans.   Lenders see a very, very conservative appraisal but if the area is small or there are very few comps...the possibility of error goes up. 

The May foreclosure figures are just out, and the number of filings in the U.S. dropped 6%. That should have plenty of people rubbing their eyes in disbelief. Good news, really? Could this be the beginning of the turnaround that so many homeowners have been hoping for?

Foreclosures Drop in May - BusinessWeek

When do you buy?

 

I really would love to be right about everything.  When the downturn was just beginning, I thought we were looking at a 1 to 2 year correction.  I didn't know the mortgage crisis, the national debt, fuel costs, international trade and even changes to lending and appraisal would all create the "so called" perfect storm.  The latest changes in appraisal guidelines and the coming foreclosures now considered valid comparables is, in my opinion, slowing a recovery.  

Regardless, I do think we're on the verge of a recovery here in Florida.  Months of improved sales statistics when compared to last year in the same months along with reducing inventories lead me to believe opportunities are ripe for the picking.   I always try to buy properties at a good price and sell when I don't care.  Right now, there are more properties with values based on foreclosure numbers combined with an almost unheard of interest rate.  If you can afford to buy, this is a great time.  This is, of course, in my opinion.  Yes....I really would love to be right all the time....but my best educated guess would tell me to buy...but buy properties with cash flows to offset expense.

Blackberries are in season here on the island, but only if you know where to look.