Sounds logical, doesn't it? Unfortunately, many folks have been misled as to what it actually takes to purchase a home - and what they will need to bring to the table.
The main discrepancy I see is the confusion between your down payment, and your closing costs.
The down payment is the amount of money that your lender will require that you pay upfront on your home. Based on the loan terms, this amount will vary but at this point in time, you will need AT LEAST 3.5% down on a home purchase. To put this in perspective, when buying a $150,000 home, the lender will require at least $5,250 to be placed towards the purchase. Remember, this is a minimum.
This amount of money, however, is not to be confused with closing costs. In Florida, the buyer will incur closing costs of roughly $2,270 on the same $150,000 purchase, which includes title insurance, required taxes, and professional fees. For a handy closing cost calculator, check out
http://www.sarasotaclosings.com/ClosingCostCalculator.shtml
Perhaps the most misunderstood element of money required at closing, however, comes in the form of lender fees. When obtaining a loan, the lender will assess fees. Make sure that you get a clear schedule of fees from your lender.
You will also need to pay for inspections and appraisals, and possibly a survey. Together, these are generally about $1,000. Often, these can be paid at the time of closing and "added into" closing costs.
This blog is not to scare you, simply to point out all the elements involved.
1) Down payment
2) Closing costs
3) Inspections, appraisals etc
4) Lender fees
IMPORTANT - if you are a first time home buyer, you are likely eligible for the federal governments tax credit up to $8000. This credit can be applied to your closing costs - however cannot be used for your down payment.
Friday, June 26, 2009
Monday, June 22, 2009
Choosing a Sarasota Agent
A recent story out of Hollywood related that the widow of TV pioneer Aaron Spelling, when selling their $150 million dollar mansion, allowed her dog to pick her real estate agent. She simply allowed the dog to sniff the agents - if he reacted badly, they were sent away. Ultimately, the dog approved of one of the agents who got the listing.
Most of our clients (ok, none of them!) are in a position to buy and sell on the level of $150 million. However, to each of our clients, the money they DO have to spend is a major sum, and is not to be treated lightly. So here in Florida, where we might be slightly more realistic than Ms. Spelling - how do you go about finding an agent that will give you the best advice for YOUR home sweet Sarasota home?
Survival of the fittest helps. As a tough housing market has dragged on, many of the agents have necessarily moved on to more lucrative careers. Those that remain likely have a following, a reputation, and a strong business plan that is supporting them in these tough times. These are the agents that have the tenacity, the commitment and the ability that has allowed them to survive, even thrive in these conditions.
But there is another trait of an excellent agent. The desire to develop skills, hone talents and always continue to grow is a rare trait in today's market, where most feel it hard to just hang on. Looking for a great agent? Look for those who have pursued additional designations and education - who have used slow times to further educate themselves to better serve you. Look for agents that go above and beyond, address your specific needs and don't just send form letters. With today's technology, everyone can set up an automatic search to alert you of new properties - does your agent offer insight and thoughts into each new opportunity as well?
I heard someone say once "I don't understand why agents get paid so much - all they do is open doors" If your experience with an agent is akin to that, I suggest you find a better agent. Today's agents are educated, dedicated, interactive and responsive business people. Don't settle for anything less.
Most of our clients (ok, none of them!) are in a position to buy and sell on the level of $150 million. However, to each of our clients, the money they DO have to spend is a major sum, and is not to be treated lightly. So here in Florida, where we might be slightly more realistic than Ms. Spelling - how do you go about finding an agent that will give you the best advice for YOUR home sweet Sarasota home?
Survival of the fittest helps. As a tough housing market has dragged on, many of the agents have necessarily moved on to more lucrative careers. Those that remain likely have a following, a reputation, and a strong business plan that is supporting them in these tough times. These are the agents that have the tenacity, the commitment and the ability that has allowed them to survive, even thrive in these conditions.
But there is another trait of an excellent agent. The desire to develop skills, hone talents and always continue to grow is a rare trait in today's market, where most feel it hard to just hang on. Looking for a great agent? Look for those who have pursued additional designations and education - who have used slow times to further educate themselves to better serve you. Look for agents that go above and beyond, address your specific needs and don't just send form letters. With today's technology, everyone can set up an automatic search to alert you of new properties - does your agent offer insight and thoughts into each new opportunity as well?
I heard someone say once "I don't understand why agents get paid so much - all they do is open doors" If your experience with an agent is akin to that, I suggest you find a better agent. Today's agents are educated, dedicated, interactive and responsive business people. Don't settle for anything less.
Thursday, June 18, 2009
Tax Credit Update
The $8,000 tax credit from the federal government has a string attached that many people are not aware of - the home sale must be completed by November 30, 2009.
If you are a first time home buyer, or have not owned a home in 3 years, you are eligible to receive up to $8,000 in a tax credit. Newly passed provisions also allow for home buyers to apply the credit to closing costs, or to put down more money over and above the required 3.5% ( the tax credit cannot be used to supply the required 3.5% deposit, however)
With average sales taking between 30-60 days to complete, prospective Sarasota home buyers who want to apply for the credit should plan on being in a position to purchase a home by September at the latest. First steps?
1) Get pre-qualified with a reputable lender/brokerage
2) Contact a professional buyers agent who knows the area and inventory well
3) Restrict all other major purchases that might affect your credit
4) Start looking!
Sarasota has an amazing inventory of homes in every price range for the first time home buyer. With low interest rates, low prices, and now this credit, it may be the best time in years to buy a Sarasota home.
If you are a first time home buyer, or have not owned a home in 3 years, you are eligible to receive up to $8,000 in a tax credit. Newly passed provisions also allow for home buyers to apply the credit to closing costs, or to put down more money over and above the required 3.5% ( the tax credit cannot be used to supply the required 3.5% deposit, however)
With average sales taking between 30-60 days to complete, prospective Sarasota home buyers who want to apply for the credit should plan on being in a position to purchase a home by September at the latest. First steps?
1) Get pre-qualified with a reputable lender/brokerage
2) Contact a professional buyers agent who knows the area and inventory well
3) Restrict all other major purchases that might affect your credit
4) Start looking!
Sarasota has an amazing inventory of homes in every price range for the first time home buyer. With low interest rates, low prices, and now this credit, it may be the best time in years to buy a Sarasota home.
Wednesday, June 03, 2009
Act Now! Home Buyer Tax Credit in 2009
Sarasota home buyers considering the purchase of their first home now have the chance to take advantage of a federal income tax credit through the American Recovery and Reinvestment Act.
This act modifies the existing, temporary federal income tax credit for qualified first-time home buyers. But the opportunity is time-sensitive, as the purchase must be made before December 1, 2009.
Qualified home buyers - individuals who have not owned a home during the past three years - can receive a federal tax credit of 10 percent of the cost of their principal residence, up to a maximum credit of $8,000. Buyers receive a tax credit on their personal income tax return in the calendar year following the year of closing on their home.
The modified version does not require home buyers to repay the credit as long as they retain ownership of the home as their primary residence, for three years. This incentive is also retroactive, covering those homes purchased on or after January 1, 2009.
To be eligible for the tax credit, qualified first-time buyers must purchase and reside in the principal residence before December 1, 2009. There are also income limits; however should a home buyer exceed the income limit, partial tax credits may be available.
The convergence of low interest rates, a healthy inventory, buyers-side power in negotiation, and this credit results in a “perfect storm” of opportunity for home buyers in 2009. Need more information? Call True Real Estate, Sarasota’s Exclusive Buyer Agents and let us help you get into that dream home.
This act modifies the existing, temporary federal income tax credit for qualified first-time home buyers. But the opportunity is time-sensitive, as the purchase must be made before December 1, 2009.
Qualified home buyers - individuals who have not owned a home during the past three years - can receive a federal tax credit of 10 percent of the cost of their principal residence, up to a maximum credit of $8,000. Buyers receive a tax credit on their personal income tax return in the calendar year following the year of closing on their home.
The modified version does not require home buyers to repay the credit as long as they retain ownership of the home as their primary residence, for three years. This incentive is also retroactive, covering those homes purchased on or after January 1, 2009.
To be eligible for the tax credit, qualified first-time buyers must purchase and reside in the principal residence before December 1, 2009. There are also income limits; however should a home buyer exceed the income limit, partial tax credits may be available.
The convergence of low interest rates, a healthy inventory, buyers-side power in negotiation, and this credit results in a “perfect storm” of opportunity for home buyers in 2009. Need more information? Call True Real Estate, Sarasota’s Exclusive Buyer Agents and let us help you get into that dream home.
Monday, June 01, 2009
Sarasota Real Estate Pricing
When looking for a home, especially in this market, the general tendency is to look for the lowest price. But although we love getting deals as much as the next guy, we need to throw in a word of caution.
There are many homes for sale in Sarasota that have unbelievably low prices. They generate a lot of interest and inquiries. So why aren't they selling? I'm sorry to be the bearer of bad news, but even in THIS market, if it looks to good to be true, it probably is.
1) Location - a beautiful home won't sell if its in an ugly neighborhood. Sounds harsh, but it's true. During the boom, many speculative investors and builders scooped up any patch of grass they could and built a home on it. However, if every other home in the neighborhood is 60 years old, run down or abandoned, a beautiful new home simply won't sell.
A similar problem is a home in a distressed area. If an area has alot of foreclosures, no services or amenities or is far from the beach, they may have trouble selling it with so many homes available.
2) Inherent problems - If a home needs new plumbing,, a new roof, new air conditioning and is prone to flooding, it doesn't seem like such a deal anymore, does it? Often paying more for a home is well worth it if all the major components are in good shape.
3) Environmental/neighborhood concerns - Make sure you do your due diligence on a home - are there any major construction projects palnned? Major assessments coming down the pike? Prison being built nearby? Sometimes homeowners are trying to get out of the area prior to something that may affect their market value - although that will be disclosed as you negotiate, they may hope that the price will lure you in.
The good news is, there are some excellent deals out there. You just can't go by price alone.
There are many homes for sale in Sarasota that have unbelievably low prices. They generate a lot of interest and inquiries. So why aren't they selling? I'm sorry to be the bearer of bad news, but even in THIS market, if it looks to good to be true, it probably is.
1) Location - a beautiful home won't sell if its in an ugly neighborhood. Sounds harsh, but it's true. During the boom, many speculative investors and builders scooped up any patch of grass they could and built a home on it. However, if every other home in the neighborhood is 60 years old, run down or abandoned, a beautiful new home simply won't sell.
A similar problem is a home in a distressed area. If an area has alot of foreclosures, no services or amenities or is far from the beach, they may have trouble selling it with so many homes available.
2) Inherent problems - If a home needs new plumbing,, a new roof, new air conditioning and is prone to flooding, it doesn't seem like such a deal anymore, does it? Often paying more for a home is well worth it if all the major components are in good shape.
3) Environmental/neighborhood concerns - Make sure you do your due diligence on a home - are there any major construction projects palnned? Major assessments coming down the pike? Prison being built nearby? Sometimes homeowners are trying to get out of the area prior to something that may affect their market value - although that will be disclosed as you negotiate, they may hope that the price will lure you in.
The good news is, there are some excellent deals out there. You just can't go by price alone.
Top 3 Sarasota Real Estate Questions
Working with buyers 100% of the time, we find that many of the same questions and concerns arise on a regular basis. Here is a quick FAQ to help you with our most frequently heard concerns:
1) Should I buy a single family home or condo? The main concern about buying a condo seems to be the fees; about a single family home, the maintenance. The fact is, in reality you will pay about the same monthly for similarly sized properties - it comes down to semantics.
For instance, the condo fees often prove a deterrent for buyers. But the condo fees are not empty costs; condo fees generally include public insurance for the unit, lawn care and outside maintenance, pest control, maintenance for the recreational facilities, and sometimes even basic utilities. Single family homes may or may not have HOA fees, but you will have to pay lawn care, pool care, insurance, etc out of pocket.
If you will be a full time resident and don't mind doing your own lawn and home care, a single family home may be best. Seasonal Sarasota residents may prefer to have a condo take care of everything. But take heart - even if you are seasonal, there are plenty of services available to keep your home well maintained.
2) Why are the taxes so different from property to property? This is a big question, and often people prefer one $500K property over another because the taxes appear lower. The fact is, that depending on the sellers length of ownership, whether or not they homesteaded, and other exemptions can greatly affect their taxable (assessed ) value. Unfortunately, their tax rate may be completely irrelevant to yours. When you purchase a home, all levels reset to the current tax rate at market value. Therefore, virtually any $500K home will generate the same taxes. The only slight variable is within the Sarasota city limits, where taxes run a bit higher.
3) Is the Sarasota real estate market going to drop further? Oh how I wish we had the answer to this. however, from our vantage point on the ground, we can make some general observations. Well priced properties are selling, and selling quickly. This is a good sign of buyer activity. Properties languishing on the market may be doing so because the prices are still perceived as a bit high, so individual home prices may drop. But overall, we aren't seeing sellers come down too much on their home prices. Also in general, home prices appear to have less room to fall further, while condos, especially beach properties, likely will drop a bit more.
All that being said, it comes down to the individual property, and whether or not it is priced well. As full time buyer agents, we can help you spot the deals.
1) Should I buy a single family home or condo? The main concern about buying a condo seems to be the fees; about a single family home, the maintenance. The fact is, in reality you will pay about the same monthly for similarly sized properties - it comes down to semantics.
For instance, the condo fees often prove a deterrent for buyers. But the condo fees are not empty costs; condo fees generally include public insurance for the unit, lawn care and outside maintenance, pest control, maintenance for the recreational facilities, and sometimes even basic utilities. Single family homes may or may not have HOA fees, but you will have to pay lawn care, pool care, insurance, etc out of pocket.
If you will be a full time resident and don't mind doing your own lawn and home care, a single family home may be best. Seasonal Sarasota residents may prefer to have a condo take care of everything. But take heart - even if you are seasonal, there are plenty of services available to keep your home well maintained.
2) Why are the taxes so different from property to property? This is a big question, and often people prefer one $500K property over another because the taxes appear lower. The fact is, that depending on the sellers length of ownership, whether or not they homesteaded, and other exemptions can greatly affect their taxable (assessed ) value. Unfortunately, their tax rate may be completely irrelevant to yours. When you purchase a home, all levels reset to the current tax rate at market value. Therefore, virtually any $500K home will generate the same taxes. The only slight variable is within the Sarasota city limits, where taxes run a bit higher.
3) Is the Sarasota real estate market going to drop further? Oh how I wish we had the answer to this. however, from our vantage point on the ground, we can make some general observations. Well priced properties are selling, and selling quickly. This is a good sign of buyer activity. Properties languishing on the market may be doing so because the prices are still perceived as a bit high, so individual home prices may drop. But overall, we aren't seeing sellers come down too much on their home prices. Also in general, home prices appear to have less room to fall further, while condos, especially beach properties, likely will drop a bit more.
All that being said, it comes down to the individual property, and whether or not it is priced well. As full time buyer agents, we can help you spot the deals.
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