Rob Arnold, metro Orlando full service, investor friendly & foreclosure Realtor

The National Association of Realtors issued a call to action today to contact your Senators and Congressmen about extending the deadline on the $8,000 home buyer tax credit. Click the link above and you can see NAR's video on this subject.

While I am glad that the tax credit has probably helped stimulate the real estate market and the economy some, I also wonder about the longer-term effects of this so-called "stimulus" money on this nation's deficit and national debt.

I would rather see the money in the hands of the people as opposed to Wall Street fat cats or failing banks though. However I also hear stories on the news and elsewhere of people using the $8,000 to pay for frivolous items. Kind of a windfall shopping spree. I also don't like mortgaging the future of this country by giving free money to people while increasing massive debt that may end up crushing our nation one day (if it hasn't already). Kind of "socialized" real estate buying if you can call it that. Take from my pocket and put it in yours.

I did some quick research in our Mid-Florida Regional MLS system which covers portions of some 14 counties surrounding Orlando and Tampa. Of 55,500 sales since 12/1/2008, some 23,594 (42.5%) sold for all cash. Which means some 31,906 (57.5%) sold for some type of financing terms. I am assuming that most of the cash buyers are investors who won't be getting the tax credit, while most of the financed buyers are owner occupants many of which will be getting the tax credit. I'm not sure exactly what these numbers mean though. However it does show that many people are buying regardless of whether they are getting the $8,000 tax credit. Personally I bought an investment property earlier this year and didn't get a government check out of it.

So what's your take on extending the tax credit? Is that a good thing? Or should the government simply butt out and stop meddling with the economy? I haven't made up my mind, but overall I tend to be against most government programs that involve spending my tax dollars on items that aren't prescribed specifically in the Constitution.

Last year the City of Orlando raised the property tax millage rate on everyone in the city limits. This year they raised parking fees, permit fees, park admissions, and just about every other fee you can dream of. After all they are broke and have already cut expenses to the bone. I've wrote article after article of how wasteful the City of Orlando has been in the past under Mayor Buddy Dyer but did compliment him on finally coming to his senses and lowering the city's budget for 2009-2010 for the first time in over a decade.

The Orlando Sentinel had an article in the Local & State section today outlining all the extravagant spending that the City of Orlando continues to do each year. Orlando Sentinel article. From $5000+ paintings to $35,000 bathrooms to the 3 big venues being built downtown. The city has a giant insurance policy covering all these fancy items too.

Funny that with all these insured items listed on the Sentinel article, that the Lake Eola fountain which got struck by lightning last month apparently won't get fixed because of the high deductible. Go figure that one out. It's a fountain for crying out loud - compare the $2.3 million repair cost to the price of a few Hummer trucks - the price seems out of line to fix an old motor and replace some plastic windows. Is a new motor going to be made out of solid gold??? Contractors are hungry right now. Anyway ...

When you get a chance read through the article and keep in mind that these are your tax dollars being spent right now during this Great Recession. Every time you put money in the parking meter remember what you are paying for.

Another month has passed and the real estate numbers for Orange County and Seminole County Florida have been released by the Orlando Regional Realtor Association.

Here is a direct link to the full details of these market statistics.

ORRA Originated Sales

The inventory of properties for sale decreased yet again from July by nearly 900 properties. New pending contracts are down slightly and closings are down slightly from July, but this is typical because in most areas of Central Florida school started up in mid-August which effects the number of buyers willing to move. Average days on market dropped to just 93 days which is the lowest this number has been since March 2007.

The number of properties under contract has spiked to a huge 8,237. This is reflecting the giant backlog of short sale properties that take many months to get bank approval and oftentimes never make it to a closing - on average less than 20% of all short sales ever close.

Prices continue to go down. The median sales price is down to just $128,000 and the average price is just $159,700. The big effect on prices is of course the flood of foreclosures still on the market. And there are thousands of more foreclosures still on the horizon. Because of these surging foreclosures, I'm of the opinion that this decrease in inventory is most likely only temporary. As more and more short sales turn into REOs, the market is going to have to get flooded with inventory yet again. I keep hearing rumblings from various circles that the $8000 tax credit is going to be extended, so make sure not to miss out on yours during this fabulous buyer's market.

I just got back from the hearing this afternoon at the Seminole County commission chambers. The big issue was the proposed stormwater assessment fee to be charged to all property owners in unincorporated Seminole County. See my previous blog post: New proposed stormwater assessment in Seminole County Florida

The chambers had some 100+ people packed into it. I arrived about 30 minutes early and the chamber was already packed full of people. The parking lot outside had probably another 500 people in it. Pretty much everyone there appeared to be in opposition to the fee with many people holding "no tax" signs.

In a surprising turn of events, shortly after the hearing started and before any member of the public could speak out Commissioner Van Der Weide made a motion to indefinitely postpone the assessment. The motion did end up passing and thus the assessment was killed before it even got much discussion.

The county commission really stirred up a hornet's nest with this proposed fee. I'm just glad it is gone for now. At some point it may come back on the agenda, so keep an eye out for it. Governments everywhere are trying to nickel and dime citizens every way that they can.

As a side note, the county commission also decided to slightly raise the millage rate county-wide so residents will still pay a little bit more. The final vote for the millage increase is on 9/22/09.

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(Copyright © 2009. Sand Dollar Realty Group, Inc. All rights reserved.)

Rob Arnold - Your full service and investor friendly Realtor ® in Orlando and Central Florida.

407-389-7318 / 1-877-389-7318 www.SDRhouses.com www.WeBuyHousesFlorida.com

We sell foreclosure, short sale, and bank owned REO house home throughout Central Florida, metro Orlando, and the Space Coast. We sell and list Central Florida real estate and Orlando real estate. Free list of foreclosure and short sale houses available. Our firm also provides flat fee MLS listings, For Sale By Owner, and menu-based services in most parts of Florida including Orlando, Altamonte Springs, Apopka, Kissimmee, Sanford, Lake Mary, and Deltona.

Short sales. Everyone is doing them. They are all the rage right now and will be for several years to come until all these foreclosures and distressed properties get through the system.

In my last article Short sales and double closings - the good, the bad, and the ugly - Part 1, I discussed the basics of what a short sale double closing involves. I also discussed "The Good" things about these transactions. Before you proceed with reading this article, I do suggest that you read Part 1 as this article is simply a continuation of that one.

There is an absolute necessity for investors to legitimately conduct and close these deals the right way - legally, ethically, and with full disclosure to all parties including the lenders and mortgagor. There is simply too much inventory to be bought up right now and there are even more foreclosures on the way. In this Part 2, I will be discussing the more questionable "bad" side of these transactions.

The Bad -

Some investors (just like some Realtors, some attorneys, and some mortgage companies) will do things that are not win-win. Thus giving these double closing transactions a bad name. The information below has not been run through any lawyer, it is simply my layman's opinion based on many hours of attending various seminars and classes as well as being involved with several hundred foreclosure transactions over the last few years.

One instance is when an investor puts a property under contract to buy, negotiates the short sale, but when they don't find an end buyer the investor simply walks away from the deal or worse lets the property get foreclosed. I just don't understand the ethics behind indefinitely tying a property up with a purchase contract or an option contract and then not closing on it if you get the short sale approved, unless maybe you gave the seller some non-refundable money for doing this. Especially in an option situation if there is no consideration that has changed hands between seller and buyer, then the option is more than likely null and void anyway. You can't take away the seller's rights in a property (even temporarily) without paying for it. Almost every state has laws regarding contracts, options, and consideration. Florida is no exception. Check out Florida Statute 475.43 . Without "substantial consideration" changing hands, then by law the contract or option is considered null and void.

Then we come to the practice of having the seller sign a deed over to put the property into a land trust with the buyer (or some entity or other person that they control) being the trustee and the seller being a beneficiary. The law in most states has clear limits on what a trustee is permitted to do. After all, a trustee has a legal duty to be looking out for the best interests of the beneficiaries. Trustees are supposed to have a fiduciary relationship with the beneficiary. How can a trustee realistically do this if they are trying to profit off the property by purchasing it? Either you are acting in an arm's length transaction or you aren't. Regardless of the paperwork you had the seller sign, judges have liberal discretion to throw it all in the garbage can if they think you are "acting in bad faith" or with a "conflict of interest" or doing something "unconscionable." In Florida we are talking about Florida Statute 736.0802 . A trust is voidable by the beneficiaries for this type of nonsense because the trustee has a legal duty of loyalty to the beneficiaries. An analogy would be letting the opposing football team's quarterback be your team's coach - obviously they could not realistically be looking out for your team's best interests even if you made them sign a 20 page contract saying otherwise.

Next we come to title companies. In nearly all 50 states, there are very few title companies that will even consider handling a double closing or an option closing on a short sale transaction. The reason they will not handle these closings is because the title insurance underwriter typically will not allow them. Check out these official guidelines.

From Attorneys Title Insurance Fund and Old Republic Title .

From Stewart Title.

Most other title insurers have similar guidelines and in fact nearly all title agents will require full disclosure to both the buyer's lender and the seller's lender before allowing a short sale double closing or option closing to take place. Disclosure is the key in this instance. Now if both the buyer's lender and the seller's lender know exactly what is going on and have given written approval of the entire transaction, there should be no problem. Odds are extremely high that they don't know the exact details of the end buyer transaction.

Lastly for Florida investors please be aware of the foreclosure rescue law Florida Statute 501.1377 that went into effect on October 1, 2008. It made major changes to how investors can buy homes from people in foreclosure. Pay particular attention to the "equity purchaser" part of this new law. Many other states have passed similar laws and the federal legislature is talking about passing one as well.

In the next article, I will get into the "ugly" part of the short sale double closing arena. The way to cross the line and get into potential criminal mortgage fraud. Yikes!

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(Copyright © 2009. Sand Dollar Realty Group, Inc. All rights reserved.)

Rob Arnold - Your full service and investor friendly Realtor ® in Orlando and Central Florida.

407-389-7318 / 1-877-389-7318 www.SDRhouses.com www.WeBuyHousesFlorida.com

We sell foreclosure, short sale, and bank owned REO house home throughout Central Florida, metro Orlando, and the Space Coast. We sell and list Central Florida real estate and Orlando real estate. Free list of foreclosure and short sale houses available. Our firm also provides flat fee MLS listings, For Sale By Owner, and menu-based services in most parts of Florida including Orlando, Altamonte Springs, Apopka, Kissimmee, Sanford, Lake Mary, and Deltona.