Rich Cornelius

What are Buyer's closing costs??? With so many out-of-state clients, this is a common question for me. I'll try to sum up general closing costs, which average between 1-2% of the purchase price.

1. Stamps on the mortgage: $.04 per $100 (total mtg amount)
2. Intangible tax: $.002 per $100 (total mtg amount)
3. Title co fees: $200 - $500 (includes various endorsements)
4. Mtg co fees: will depend on your lender (0% - 1% of mtg amount)
5. Escrows: Your lender may require you to escrow future insurance and tax payments...these escrows can be 3, 6, or 9+ months (dependent on mtg)
6. Home Inspection: Normally paid out of closing ($200 - $500)
7. Appraisal: Can be paid at or outside of closing ($300 - $500)
8. 1st Years HO Insurance: If buying a SFH, you will be req'd to purchase your policy at or before closing (dependent on home)
9. Lender's title insurance policy: $350 - $1000
10. Monthly Maint Fees: Will be prorated for the month
11. Survey: $300 - $400

Seller-paid closing costs:

1. Real estate commissions
2. Doc Stamps
3. Owner's title policy
4. Tax amount for time of ownership during that calendar year
5. Monthly Maint fees (prorated)
6. Any back taxes, hoa/condo fees, etc.

With it being a Buyers Market (Take note, Sellers) I wanted to touch on some aspects of home-buying that may be "Less-Mentioned" or thought about. Although your primary focus is buying right now, statistics show the average home owner will only stay in the home appr 7 years! With such a mobile society and fluid job market, expect to be uprooted (your choice or not) within 7 years and PLAN YOUR PURCHASE ACCORDINGLY...or better said, plan on choosing a home with good RESALE VALUE!

Here a few areas to consider when purchasing knowing this is not you final home:

1. Schools - this point can be belabored, but when it comes to children, parents want their kids in the best schools possible. If choosing between 2 homes, even if you don't have (or expect to have) children, take into consideration school quality before you make your decision. Florida school grades can be found at http://schoolgrades.fldoe.org/
2. Neighboring properties - this can help OR hurt you. I have a friend who bought a home 10+ years ago and now he finds himself surrounded by light manufacturing/industrial properties. If you don't mind bumps and noises in the night, cool. However, this will present an issue when selling. Do your due diligence on surrounding properties before pulling that trigger. The flip side: if my friend decides to sell, he would be well served by investigating a possible zoning change to similar zoning for his area...homes zoned for commercial enterprises are sometimes more valuable than homes left for residential purposes.
3. External Obsolecences - this term refers to external variables the de-value a property. In a local city, a developer built an exclusive gated enclave that just happened to be next to a very small dog kennel. Years later, owners of these McMansions were upset to learn that the kennel, which is hugely popular, asked the municipality for permission to expand their kennels. Suddenly, neighbors were up in arms about the noise and smell from the pre-existing kennel. The issue is not about the kennel or the multi-million dollar homes...the kennel, whether big or small, externally affects the value of that subdivision.
4. To pool or not to pool - this is a completely subjective feature. I have had buyers who absolutely needed a pool, didn't want to see any homes with pools, and didn't care whether it had a pool or not. In general, a pool will only add about $5000 - $10,000 of additional value to the property. Think long and hard before you have a $45,000 pool installed because you will NOT get your investment back when you sell.
5. Roads - this is something very savvy buyers will look into. Throughout the Tampa Bay area, we have seen a HUGE population boom which corresponds with an increase in traffic. Home sitting on a quiet 2 lane, scenic road in 1990 now find themselves watching 1000's of cars drive by on a bustling 4 lane artery in 2008! Sometimes, there is even a road there, but traffic needs dictate one be constructed. So how does a buyer find out if a road will be widened in the near future??? In Pinellas County, we have a Metropolitan Planning Organization (MPO) that issues 20 year forecasts for traffic/road construction: http://www.pinellascounty.org/MPO/LRTP/CFP.pdf

Wow, what a week it has been...buyers making offers, sellers not accepting. I think many sellers have not accepted the reality of their situation. According to Zillow.com, 51% of all US homeowners believe their homes have lost value. That leaves 49% who think their homes are as valuable or have increased in value in the last year! Huh? EVERYONE has seen the value of their home go down.

I heard this example while I was getting my GRI designation, which is Graduate, Realtor Institute. It goes to the core of how we, humans, evaluate value and make decisions based on PERCEIVED value:

Every week you go shopping, you pass those 2 liters of Coke, Pepsi, Dr. Pepper, etc. Invariably, they are $.99. It's a given, like the tides and taxes. You shrug, feel you are paying what is reasonable (based on recent purchases), grab a couple 2 liters of your favorite brand, and move on.

Then one week, the indescribable happens - the price on the same 2 liter goes up 10% and is now $1.09!

What gives? Given the increased cost, you decide to hold off on buying a 2 liter...the family can drink water for a week.

The next week, that same 2 liter is still $1.09 BUT a competitors 2 liter is back down to $.99. Time to switch brands - you grab just 1 2-liter in case you don't like it as much!

The next week, your brand of soda is back down to $.99 PLUS a 10% discount, making it $.89 total. Sensing that you just discovered the best bargain of the year, you throw 10 into your cart and make a beeline for the checkout counter.

Here are the lessons:

1) Value is perceived and humans establish a baseline for such value based on repetition. In real estate, they're called "comparable sales".

2) If the price is above our perceived value, we will change our spending habits AND/OR buy the lower-priced competition, even though we may not like it as much.

3) If the price is below our perceived value, we will make quicker decisions, perhaps spend MORE than we normally would, and alter our spending habits to secure the "deal".

Sellers, you will not get the upperhand in this market. Ask yourself - can I support this price based on comps? When was the last time you checked the comps? If you have been on the market for 90 days and your comps when you listed were older than 90 days, guess what? You are using comps which are 6+ MONTHS OLD and no longer viable.

Do yourself a favor and listen to your realtor. There is a reason why your first bonified offer (not a readily apparent lowball offer) is normally your best offer.

I found this article fascinating. Before you think you will get a free ride, please consult an attorney.

If you are looking for a local attorney you can trust and who is well-versed and knowledgeable in all aspects of foreclosure and bankruptcy law, I HIGHLY recommend without reservation CAROLYN SECOR, PA. Carolyn has been successfully fighting for her clients well before the housing downturn and she has a wealth of knowledge she can share with you. Her website is www.BankruptcyForTampa.com or you can call her at 727-254-1704...

http://www.floridarealtors.org/NewsAndEvents/n4-030209.cfm


'Show me the mortgage papers' spreading as foreclosure defense

WASHINGTON - March 2, 2009 - While the Obama administration battles to keep people from losing their homes, one Florida lawyer said she has a better answer to the toxic mortgage epidemic sweeping the country - fight back against the loan servicers and banks that are improperly pressing the foreclosure actions.

"The loan servicers bringing most of the foreclosure actions in the country don't own the mortgages and have no standing to take away a person's home," said the lawyer, April Charney, who has stopped scores of foreclosure actions in Jacksonville, Fla., where she works as a Legal Aid lawyer.

In essence, Charney has forced scores of plaintiffs in foreclosure actions in Jacksonville to admit they don't have legal ownership of the securitized mortgage they are trying to foreclose upon - stopping the home takeover battle in its tracks.

The strategy has spread virally around the country and now thousands of foreclosure lawsuits are sitting idly - in legal limbo.

"I have one case from 2004 where the bank has not returned to court and where my client now has deposited more money into a trust account than the house is worth," Charney noted.

Charney has held seminars in Ohio, Oregon, South Carolina and throughout Florida to educate lawyers on how to implement the courtroom defense.

At least one Brooklyn judge, Arthur M. Schack, is already using the strategy himself in the courtroom. He told a reporter recently that he denies more foreclosures than he approves. Last summer, 13 of the 14 foreclosure actions that came before him were denied.

"I want to see the servicing agent's power of attorney, I want to see all the paperwork before I approve it," he said. "If the paperwork is garbage, I deny it. If you're going to take away someone's home, it should be done properly."

The legal issue is that banks turn the mortgages into bonds, which are put into trusts, like collateralized debt obligations, or CDOs. The banks "sell" the CDOs the right to collect the revenue stream but, according to Charney, not the equity right to the property.

Charney notes that under the current set-up, the mortgage default hurts everyone - like a neighbor who could be a state worker whose pension fund money is invested with a hedge fund that has invested in a mortgage CDO.

"So far I've drafted about 1,500 lawyers into my army," Charney said in a telephone interview last week. She is scheduled to hold her first New York seminar next month.

"Of course, I'm looking to educate them and have them use the same technique here," she said. That should be sweet music to homeowners here who are facing a foreclosure action.

Charney said Washington has the resources to allow every mortgage holder the right to modify their mortgage - something that would definitely mute the criticism that the Obama plan rewards failure by allowing those who obtained mortgages they couldn't afford to cut a deal for a lower monthly payment.

"Look, the same problem that banks are having with securitized mortgages is going to spread to defaults with car loans, credit card accounts and student loans - they are all securitized and the banks and loan servicers starting legal actions to collect on those defaulting loans will face the same issue proving ownership," said Charney.

As for Obama's $275 million mortgage plan, Charney said she has a better idea: "The U.S. government has to take over every one of these securitized loans and open up the mortgage modification plan to every American. That's the only way we are going to get past this horrible thing," said Charney, who has become, alongside a handful of other consumer advocate legal eagles, quite a cult personality for her pioneering courtroom foreclosure defense strategy.