David Welch

I am working on a new home sale with KB Homes in Arbor Ridge in Apopka, and I was speaking with the on site salesperson Brade Majac. He was telling me about a program they belong to called Equity Residential that allows you to build up points as a renter that can be used toward the purchase of a new KB Home. The points accrue based upon how long you rent and the amount of rent you pay, and he recently had someone who had accrued $5,000 worth of points. KB Homes will let you use the points toward down payment, closing costs or upgrades, so you have the flexibility to choose. Brade gave me a partial list of the apartment complexes that are part of the program.

Here are some of those communities: Arbors at Maitland Summit, Golfbrook at Sabal Point, Verandahs at Hunt Club, Milan Apartments, Crescent Place, The Lofts at Altamonte, Estates at Maitland Summit, Alexan at Maitland Crossing, Post Apartment Homes, and Club Espirit Apartments. The catch is that you have to sign up for the program, so if you live in one of these communities you are not automatically in the program. Check with your leasing agent to see if you can sign up if you are thinking of making a home purchase at the end of your lease. For more information you can check their website at EquityResidential.com

Orlando Real Estate, David Welch Real Estate Optimist

I just got off the phone with a very nice guy in Michigan. He and his wife are looking to purchase their first home, and he was looking for information about first time home buyer assistance programs. I certainly am not completely aware of programs in other states, but told him that I could only imagine there would be similarities. Here in Orlando there are city, county, state and federal programs available to assist first time home buyers. The city and county programs are underfunded right now, but there is still money available under the right conditions. The Orange County SHIP program for instance had to reduce the amount of assistance that buyers can qualify to receive, but the highest amount of assistance is still $25,000. The home must be in the county and either have recent repairs of between $5,000 and $15,000 or be a brand new home. There is a state bond program that provides up to $10,000 that can be used anywhere and does not have any particular qualification requirements other than a standard FHA loan. The big one now is the Neighborhood Stabilization Program that is part of the stimulus package. You have to purchase a property in one of the targeted areas, but you may qualify for up to $35,000. The other bonus with this is that you only have to put up 1.75% of your own money instead of the usual 3.5% required by FHA.

Joseph, thank you for your call and good luck to you and your wife Lashonda. Buying your first home is an exciting time, and worth the effort.

Orlando Real Estate, David Welch Real Estate Optimist

Here in Orlando we have thousands of short sales active and pending. The last time I ran the numbers in the MLS, there were over 10,000 properties identified as short sales. There has been a recent change in our MLS as far as some of the data fields are concerned that relate to identifying short sales and REO's. We should have much better numbers for tracking these as the bugs get worked out. I have posted a number of stories about short sales and the short sale "process." One of my realtor.com blogs was quoted in the Colorado Springs Business Journal yesterday. In that particular post, I was crunching the numbers on the dollars being lost by banks as short sales languish in the pending drawers for months at a time.

I did get good news on one of my short sales last Friday. JP Morgan Chase has finally approved it, and provided a written payoff letter. Fortunately, this buyer really wants the house. It is a terrific buy in Baldwin Park, and she has stuck with it through this entire process that began six months ago. Many buyers give up. I received an approval on a Countrywide back in May, only to have the buyer back out of the deal. You cannot blame him since it took eight months to get that one approved. Just a word of advice about the short sale process. When preparing the preliminary HUD have your title company over estimate everything, because the banks are knocking just about everything down. In essence they are making everybody pay for their mistakes. I understand that they are losing tens of thousands of dollars, but they made the loan in the first place.

I guess if you agree to work on a short sale you are accepting some risks too. Make sure you go into it with your eyes wide open. Whether you are a buyer a seller or an agent, there are risks with short sales. For the buyer, you may be able to get a great deal, but the bank may ask for more money from you. The may ask for a higher price up front or more money at closing to make the deal work. Sellers should be aware that the bank may ask you to bring some money to the table to get the deal closed especially if it was not your primary residence. Agents who have not listed or sold a short sale should be aware of the numbers in your market. Here in Orlando there are over 4,000 short sales pending, but fewer than 300 closed last month. They are taking anywhere from six months to over a year to get approvals. I think some of this may change over the next several months, but right now this is what we are experiencing here in the sunshine state.

Orlando Real Estate, David Welch Real Estate Optimist

Sales for August topped the 2,000 mark for the third month in a row, while inventory dropped to around 16,400. The median price also dropped a bit to $129,000 as bank owned properties continue to make up about 50% of the closed sales. I did receive an approval on one of my short sales in Baldwin Park, and I am beginning to think that we may start to see banks moving on the short sales by the end of the year. There are two reasons why I think the short sale market may begin to change. First, The Fed's plans for purchasing mortgage backed securities end at the the end of the year. Right now those purchases keep the mortgage market liquid and keep those bad loans off the banks books. I do not know what The Fed's plan is regarding the purchases they have already made, but at some point they should have to go back to the banks. Second, the Financial Accounting Standards Board (FASB) is looking at requiring banks to mark to the market the value of their loan portfolio, much like corporations have to do now with securities. If that goes through, banks would have to value their loan portfolios at the market. They would have to account for pre-foreclosures / short sales on their balance sheets and income statements as an unrecognized loss. At this point, the banks are pretty much not being held accountable for their bad loans, but with The Fed actions coming to an end and the FASB looking at requirements forcing banks to value their loans at the market everything could change.

Orlando Real Estate, David Welch Real Estate Optimist

If you are actively trying to purchase a home in Orlando, odds are you have heard the phrase "highest and best". This phrase is typically associated with bank owned properties and it goes hand in hand with multiple offers. Forget the negotiating and make your best offer right up front when there are other offers on the table. While the banks would prefer cash deals, someone that comes in significantly higher, but has to obtain financing, will beat out a cash deal. The banks are very bottom line oriented and generally not looking to negotiate price and terms when they have multiple offers. They will take the highest offer that has the best terms, and then they counter that offer with their standard addendum. Each bank is different, but the bank addendum essentially makes it clear that the sale is as-is and the bank is not going to repair anything. They also typically place a per diem penalty if the buyer's loan is not ready in time to close. An extension to the contract can get pricey with per diems running anywhere between $50 to $150 per day.

Make sure you do your homework ahead of time, so that you know the values in the neighborhood before you write your highest and best. There are still good deals out there even if you do end up paying the highest and best. I am just not so convinced there are many steals out there.

Orlando Real Estate, David Welch Real Estate Optimist