Merry Christmas from St Petersburg Florida

For those of you who know me you already know my bias towards St Petersburg. After travelling to all but 4 states in the United States, I still find it hard to top St Petersburg regardless of the yardstick you use in measurement. Sure, it doesn't snow on Christmas here but my kids went and played in the 'snow' last week in their shorts, and ate Beef Tenderloin by the pool Christmas eve, went to mass without a jacket, played soccer, rode bikes, and topped it off by jumping in the pool on Christmas. That, my friends, was our dose of cold weather for Christmas. Last year we had some rain, but this year the weather was normal and absolutely beautiful and another reminder that yes we do live in a wonderful place.

Merry Christmas from my family to yours.

A soldier buys his first home today and gives me a lesson in life and business.

I had a closing on one of my listings yesterday that held a lot of meaning for the season, the current real estate market, and for my business model. It didn't really hit me until this morning, the day after the closing, when I sat down and was reading an article in the WSJ regarding the housing market.

This listing was one of the least expensive listings that I have had this year, but it probably holds the most meaning. Isn't that usually the case in everything. The 80/20 principle, I guess.

This listing was a nice 3/2 single family home in the low $200K's. The buyer is active military and is being shipped to Gitmo in a week or so, and has a fiancee and 2 small children and this is their first Home that they can call their own. So, from a real estate standpoint, this was the case where a buyer was thrilled with his purchase. He is buying a home at well-below the appraised value of the home, it is a lot of the home for the money and is in a nice neighborhood. At the closing table, he said something like "I just bought a 1/4 acre piece of American soil". How exciting! After a hurried weekend of moving in, he can enjoy a happy Christmas with his family in his own home. One of his goals was to find a home that he could be comfortable that his family would be safe and comfortable in while he was overseas. I was happy to be a small part of that.

From a business standpoint, this was important for a couple of reasons. First of all, this listing was with a seller who originally listed with an agent in our office and was unhappy with his agent. This can happen to any of us for a variety of reasons, but is never the goal at the beginning of the listing, I can assure you. Our broker had agreed to end the agreement but asked that he speak to me about what my team may be able to offer. I met him, found him to be a pleasant and most importantly (to me, at least) a straight-shooter. Because of the price point of this home, I would use our team approach to give it a bit more local exposure and that is what we agreed to do. The previous agent has since quit real estate, by the way. Lots of that going on, thankfully. It took a lot of time, conversations, strategy, and trust in each other but the house is now sold and all parties are pleased with the outcome. Service always wins out regardless of the business.

The most important part of this transaction to me, however, was that this buyer was an active soldier who is part of the force defending our principles and freedom. Say what you want about the current administration or your party affiliations, but this young man is one of thousands who are defending our lifestyle with their lives. Imagine being so excited about buying your first home, but knowing that you are leaving in 7 days for an entire year. My wife and I have been watching the series "the war" that was on PBS a month or so ago and it was eye-opening. I studied history as a kid, of course, but watching this series showed how much we have to be thankful for and how much of a sacrifice our young men and woman offer for our freedoms. It angers me to see the way that many of the war protesters target the actual troops. Again, part of the greatness of this Country is being able to disagree with the administration (or anything really), but to target the soldiers who are doing what they are told to do bothers me. The series also makes me appreciate the lifestyle we have daily. If you watch that, you will see what everyday citizens lived through during that war. Almost every citizen was impacted by the war daily. We can't say that today. God bless our troops, each and every one of them.

Why we live in St Petersburg part 74

This photo is of the 25th Annual boley center's Jingle Bell Run that took place on Wednesday in downtown St Petersburg. I took this photo from an online gallery by a user names "tampabay" on TBT.com. If you look really closely, you can see my wife and I and a few friends just getting started on the race. It was a beautiful night for the 5K that pits racers of all types - serious runners, skateboarders, walkers, runners with 4 legs, and strollers that run/walk/other along the beautiful downtown waterfront of what I think is the most beautiful liveable downtown in the US. The weather was perfect, probably mid-70's, and clear skies. along the course, supporters wave and sing Christmas carols. Just a wonderful event that makes St Petesburg great.

My only regret is that my friends started sprinting at the start so I had to chase after them the entire 5K, finished around 28 minutes or so including about 1/2 mile of lateral running to get ahead of the pack in the beginning. Rumor was that there were bands along the way, but my goal was to stay with my friends to avoid embarassment so staying vertical and breathing was my primary focus:)

It really was a beautiful evening and event.

Median or Average - which is a better gauge?

There was an article in the paper this week about the drastic price drop in home prices in the Tampa Bay area. Big headline, prominent placement - imagine that. In any event, the numbers reflect the market accurately. Or so it would seem. I pore over market numbers every month when they come out and try to see what it will mean for my clients. I am a numbers guy, so I love this stuff. I have seen this same article appear every few months it seems and it is only when the headline can say something like "biggest drop since..." or similar catchy headline. If you read the entire article, which I think most do not, it does refer to the median price drop but it also referred to the average prices only dropping 5% or so since 2006 in that month. That doesn't garner the bold headline. The truth is evident - the averages are down from last year and I think that will continue for some time. This silver lining is that for certain homes, this is a pretty darn good time to sell a home. If you look at what the median represents and then look closer at the numbers the story that I can pull out is that the largest price block in terms of sales is in the $200K range. It is actually fairly healthy relative to other price points. Not robust, but healthier. If you apply some price reduction to the price segments across the board and couple that with a growth or strong segment of homes selling in the high $100's and low $200K's, the median must go lower. If you have a house to sell in that price range the numbers could actually be good news.

Now back to the reality. I have said this for over a year to my clients. The homes that are selling are those that are in the best condition that they can be in. They are clean, show well, in good condition, and most importantly priced as well as they can be. No secret, no crazy incentives. Just a good product at a good price.

Does that guarantee a sale? I wish it could, but it is a must if you want to sell your home in this challenging market.

List Price = Overprice ?

Based on everything you read in the media today, if you are buying a property you should offer (put in your number here)% below list price because in this market, of course, everything is overpriced.

Well, I have a problem with that but it is one that is hard to pin down. The assumption that is made is that every property is overpriced by (cut a number from your favorite media outlet)%. That is true only when you look at averages, not absolutes. The problem is how to pinpoint just exactly what the selling price 'is'. well, that part is actually easy - it is what a buyer will pay and a seller will sell it to that buyer for. Simple. Getting to that agreement is not, however, simple.

What my partner and I have been saying all year to every client is to price it within range of our suggested 'sales range'. This range is a guess, perhaps an educated one but that isn't for this debate. If you overprice and miss that range, you might miss the real buyer and even worse, you will compete with homes that you shouldn't (and in the buyers' mind) don't compete with and will end up helping another one sell.

Traditionally, we Realtors could recommend a purchase appraisal be done on the home. in this market, ironically, I have had buyers say 'yes, but that is just an opinion.' Well, sure it is, but it is one that the bank is going to use to let you have some bucks to buy the home and you bet that they are on the conservative side.

The point is that in our market, there are homes that are overpriced, absolutely, but there are also many homes that are priced well and even some (fewer) that are priced below market price. At the end of the day it takes a buyer to pay for a "market price" to be attached, so let the rodeo begin.

Home Prices - what it means

If you are under a rock, you probably missed the headlines this week about the median price dropping this month. For the rest of you, let's review this a bit and see what I think it means. (for what it is worth).

These numbers represent all of Tampa Bay so this includes Pasco and Hillsborough counties in addition to Pinellas county. I will post the Pinellas numbers a bit later, I hope. I don't like to include or really review Hillsborough and Pasco counties because those areas include new subdivisions where hundreds and hundreds of similar homes are slapped together side by side. In Pinellas county, we don't have the space for that and there is a bit more of a destination or resort market influence in Pinellas. Out of state or out of Country buyers don't seek out track homes in Meadowview Grove Pines that is surrounded by Target, Publix, and an interstate. Of course, someone can find an exception. South Tampa and the Pasco coastline may be the exception in those areas.

enough said. Looking at the numbers as a whole is still an indicator of the regional market and they aren't good for many home sellers who have the paper money thoughts like the dot.com option days (I have been there, my friends). Median home prices are going to fall below $200,000 for the first time in 2.5 years, based on the article. The median in September was $200,700 - a 10% decline from the previous MONTH, and a 9.6% decline from 2006. Sales of existing homes, a better indicator, is down 39.7% from September 2006. Remember, this was down significantly from 2005 as well.

So, what does that mean? Well, for sellers it means you better make sure that your home is in great condition, shows very well, and is priced spot on - and then you have a chance of selling. I have been telling my clients all year that this is still a good market (and I have over 20 happy clients who have sold their home this year who can tell you the particulars), if - and it is a huge IF - the property is in the best possible position in the marketplace.

what exactly does that mean I hear you asking. Well, in my humble opinion, it means that if it has any functional 'issues' - it may not sell. At any price. Wow, that sounds strong, but we are seeing it play out daily. if the house is in a poor location - major issue. If the house is dated - major. If the house was remodeled cheaply - major issue. I hear Sellers tell me every day that the Buyers can overlook all of that and see the potential. Well, with over 18000 properties on the market in Pinellas county alone, they don't need to have vision unfortunately. They need patience to see all of the appropriate homes and they will buy the best one and try to get it at the lowest possible price. Very simple economics, really.

I had a potential client tell me the other day that my price recommendation was low so that it would be easy for me to sell it quickly. That may be true for some agents out there, probably too many, but if you look at what I have sold this year and for what prices you will see them among the highest price per sq foot etc... I just closed one that was sold for $290/sq foot. it is literally a few houses down from one that is listed at $178/sq foot and isn't selling.

I had to calm myself down, count to ten, and then review the market and her competition and after thinking about it more, Lee Ann and I decided to withdraw our proposal and decline the business. Let someone else list it for too much, watch it sit there for months and months and months, and then it may (MAY) sell next year for less than our target price. I wish I could bet someone money on some of these. See, in this type of market and in our society, we need someone to blame.

when prices were soaring - it was the Realtors' fault. Greedy, commission, all the rest. Well, now the prices have tanked. guess whose fault it is? you bet, ours. those darn licensed agents who are working hard to promote the home inthe best way possible, suggest a strong sales price, and have the sellers say "but I won't make my magic number after it sells". If we took out our commission - well then we are talking. That is the secret, the Realtor commission is what is wrong with the market. If you would simply deduct the $15K from that $275,000 house it would sell!!!! Sure, for $195,000.

Title Insurance Review

I read in the St Petersburg Times yesterday that the State is investigating Title insurance and at the same time I encountered a 'situation' that seems to coincide with some uncertainty regarding the industry.

The situation that I encountered was with a new client of mine who is relocating and sold his previous home with another agent in a different city. I was going through a net sheet (showing him all of the estimated costs relating to an offer I wrote for him) and the title insurance costs were reviewed. I mentioned that it is customary for the Seller to select title companies in Florida, we can always write it in and select it ourselves. I asked if he preferred a company since he just sold his condo, and he mentioned that his agent selected the company and didn't even talk to him about it. I don't want to say that is wrong, but it should have at least been discussed.

I have always had a policy of obtaining 3 quotes for title insurance for my clients or more if the client has a preference. Who they choose if their choice, but I will relay my experience with the various companies since it isn't always the same level of satisifaction. As it turns out, most of my closings are done with one company. They almost always are the least expensive, will always match or beat any other quote, and are always top notch in terms of service and performance. the only financial benefit I recieve is a cookie from their office from time to time. The most important benefit is that my clients receive great service and product, and associate that experience with my performance.

Now, the regulators. I can't say that I understand how the fees are set so I can't comment on a review of them. What I would like to see, however, is a review of the relationships between builders, real estate agents/brokers, and lenders and where any money exchanges hands. Our office used to have a relationship with a title company and could have some ownership, but all of us (agents) had to disclose this up front and have the client sign this disclosure. That title company was simply one of the quotes I would obtain and they would always try to match or beat other quotes, so again it came down to the client and service. Their service went from great to poor and the market has a way of sorting that out and they closed the office.

I would like to know who is obtaining any financial benefit from that title policy (on behalf of my client as well) being issued. Not that it really matters as long as they are among the best priced and offer the best service.

My real issue is the issue of title issuance itself. I very much understand the need for the insurance. I have come across challenges of title in my career. What I don't understand is how there can be so many policies written for one transaction. I understand that there are different risks for different parties, but isn't the search and assurance the same? I mean, there are lenders policies, sellers policies, and buyers policies? Aren't they all insuring clean title and claims against that title? The article mentions 14% of the closing costs are for title. I am assuming that means the sum of each of these policies. I just don't know if that number is the fair number. How open is this market? I understand that the rates are 'set', but by whom and does everyone have to honor them?

My rates are not determined by a governing body, by any stretch. Is this the same for title insurance? I don't know but I guess we will soon.

Why is it so high in Florida, as the article suggests? Maybe it is because our property taxes and insurance is so high? Kidding, of course, but it seems everything can be blamed on those!

Great Italian Cafe downtown

Several of my clients have always asked me to give out my list of favorites - whether it be restaurants, handymen, beaches, whatever - assuming because I meet so many people and I am so involved in St Pete that I have this 'list' somewhere. Well, I have been keeping one and giving that out to new buyers who move into our wonderful city and am just getting myself in gear and putting this online. I will try to focus on getting the full list on here in the best manner possible, but please be patient.

My first one on the list is a relatively new Italian cafe on 4th St, just north of Central, called Primi. I have been there about 6 times and each visit was as good or better than the previous visit. My wife and I went to Tuscany for a week last year so we became Italian food 'snobs', or at least we think we are, so we became even more skeptical of Italian food joints. Well, Primi works for us! The owners are from South Africa and bring a unique perspective to Italian food and it is wonderful. I think the staff is mostly family, the owners are always there, and the place just works on all fronts. The prices are very reasonable, the wine list is effecient and pares well with the menu, and the experience that the food, family, and vibe delivers is spot on.

My only beef is that they don't have a full bar, but hey - I couldn't get a glass of Makers Mark to save my life in all of Italy either.

If I do this correctly, here is a review from the Times
http://www.sptimes.com/2007/03/15/Weekend/Shaking_up_the_standa.shtml

here is one from Creative Loafing:
http://tampa.creativeloafing.com/gyrobase/Content?oid=oid%3A70606
Enjoy!

Latest News on Property Taxes

Well, it looks like the tax relief issue is going to be a 2-step dance.

Legislators are saying that they are looking at immediate relief in terms of reducing – Voters would get a chance to approve property tax relief and restructuring proposals during the Jan. 29 presidential primary election, legislative leaders agreed Monday.Rep. Dean Cannon, who chairs a joint select committee on property taxation, announced the agreement during the panel’s last scheduled meeting before a special legislative session set for June 12-22. Cannon, though, said another meeting may be held the day before the special session.The election date agreement between House Speaker Marco Rubio, R-West Miami, and Senate President Ken Pruitt, R-Port St. Lucie, follows their approval last week of a basic outline for the pending property tax reduction and overhaul.“There is already a statewide election on that date,” Cannon, R-Winter Park, said. “There will be no additional cost to the people of Florida to have the election.” The long-term constitutional approach to which Rubio and Pruitt have agreed would do away with the existing $25,000 homestead exemption for primary homes and, for most homeowners, the benefits they get from the Save Our Homes Amendment, which limits increases in homestead assessments to 3 percent annually. The proposed super-exemption basically institues a tiered approach or sliding scale that would apply tax rates to portions of the value of the home and that portion grows as the value of the home increases which appeals to those in more modest homes because more of their home is exempt than in a more expensive home.

So, that still leaves buyers (and sellers) in a position of not really knowing what their taxes will look like this year, next year, or whenever. it does, however, give some hope that at least the taxes will be less - but how much less is still up in the air.

NY Times Article Featuring Old NE St Pete

Havens St. Petersburg Fla.
A Neighborhood of Colonials and Palm Trees
By JILL P. CAPUZZO
Published: May 11, 2007
The Historic Old Northeast neighborhood of St. Petersburg, Fla., offers residents a quiet, tight-knit community with easy access to the city’s booming downtown.


http://www.nytimes.com/2007/05/11/realestate/greathomes/11havens.html?ex=1336536000&en=9a45a9e15afedd8f&ei=5124&partner=permalink&exprod=permalink

I couldn't say it better myself. This article focuses on the relatively small neighborhood that is the Old NE. Take a look at the slideshow, there are some beautiful pictures in there.

Pricing in a flat or declining market

Ah, the million dollar question. This is one of the hardest things to do right now for most sellers. Let's face it, even the best Realtors are providing a very educated best guess at what the home may sell for given the circumstances of condition, motivation, terms of sale, and so forth. One of the hardest things to convey to sellers in our market today is that there is a chance that the home may not sell - at a price that they are willing to sell it for.

This is also where the Agent should really earn their compensation as well. My partner and I have had 4 of our listings go under contract at full price or at least within 98% in the first 3 months of this year, but at the same time we have a dozen others that are not selling - even at a reduced price.

Since this is what we get paid to do, I am not going to go into the full methodology that I do to try and narrow a price range down that I truly feel will meet the sellers' needs. I can, however, share one thing that I have been 'preaching' for about 6 months.

Even though each of us would like to increase the price of our home a little to try and make a few more dollars of profit, this can actually be the single most important reason that the home won't sell. Once you reduce a price in this market, you are almost guaranteeing that you are going to sell it for even less - if it will sell.

Secondly, if your home has a functional issue against it - location, lack of living space, functional obsolesence, overimprovement, etc - the market can be extremely brutal. There are simply too many homes for buyers to choose from around your home for them to purchase the home with 'issues'.

Why we live in Florida

All it takes is a day or two of these views to help us take the hot and humid days of summer. This photo was taken from the porch of my in-laws place on Lake Wier (Sunset Harbor) just south of Ocala. Yes, it is January and my family will be in that water soon. This is sunrise over Sunset Harbor on the Eastern portion of Lake Weir.

A difficult day can be made easier with the sound of kids playing at the lake, boats zipping by, and a glass of wine later in the day during the sunset cruise.

As we complain about our taxes, hurricane season, snowbirds crowding the roads, and the sweltering heat in August let us rememeber these days. Actually, there are very few days where the water doesn't make the day more enjoyable.

On the tax and insurance front, it looks like the debates will be this week in Tallahassee so keep your eyes on the news coming from Governer Crist. Don't expect tremendous discounts in your insurance bills, but I do expect there to be at least some sense of order established where we can all know and budget for our insurance costs and expect them to be fair and consistent.

Yes it is getting more expensive to live here, but nobody said that paradise is cheap.

Mortgage Insurance Premiums and the new tax law

Mortgage insurance will be tax-deductible in 2007 based on a new tax law signed during the final moments in Congress last year. Based on what I have read (and I am sure that everything on the internet is true) this is the first time these premiums have been tax deductible. I have never been one to suggest buying a home where you need to pay these premiums but I am sure there are scenarios where this may make a lot more sense now. With the cost of 'piggyback loans' or home equity lines and loans rising with interest rates in the last 12 months, looking at PMI is something that is worthwhile.

From what I have read, there are a few things to consider and as always please contact a tax advisor for the best advice on your situation.

Those considerations are as follows:

• Applies on to mortgages that are closed in 2007. If you closed in 2006, look into a refinance in 2007 with PMI (if the numbers make sense)
• There are income restrictions.
• This is a 1-year deal. Congress will have to renew it to make it stick beyond 2007.
• If you take the standard deduction instead of itemizing, this law won't impact you. Using simple math, you need to have a mortgage of approximately $130K to pay enough interest for the deduction to make sense.

I pulled some comments from various sources and according to an analysis by Bankrate, a homeowner with a $180K mortgage woudl save about $351 in taxes because of the new law if they had PMI. It assumes that the borrower has good credit and is the in 25% tax bracket.

Cheers.