“It’s a little surprising because we thought bidding wars were done with,” Andy Aley, a home shopper in Seattle said. Aley says he was outbid on a home earlier this year, even though he offered to pay $23,000 above the listing price and also waive inspections and other closing conditions.

Homebuyers are frustrated and caught off-guard about the bidding wars re-emerging, real estate professionals report.

“We’re writing a record number of offers, but we’re not seeing a record number of closings and that’s because it’s so competitive,” Glenn Kelman, chief executive of Redfin Corp., told The Wall Street Journal.

Why are things getting so competitive? Many housing markets are seeing a drastic decrease in the number of homes listed for sale, leaving homebuyers with fewer options and more bidding on the same house. Housing analysts say the shortage in supply is from sellers unwilling to take much less for their home than what they originally paid for it and pulling homes off the market. Also, a surge in investors who snatch up homes in bulk in all-cash deals has made the market competitive.

“The bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump,” The Wall Street Journal reports.

National Association of Realtors® latest pending sales report seems to confirm the trend. Pending sales in March reached their highest level in nearly two years and are up 12.8 percent from one year earlier.

Source: “Stunned Home Buyers Find the Bidding Wars Are Back,” The Wall Street Journal (April 27, 2012)

Is Fla.’s shadow inventory a rebound threat?
The full report – The Distressed Property Market and Shadow Inventory in Florida: Estimates and Analysis – is available online.
ORLANDO, Fla. – May 1, 2012 – The term “shadow inventory” hangs over the real estate market, suggesting a thinly veiled catastrophe seen through the mist, just as the passengers of the Titanic watched an iceberg draw closer. However, a white paper written by Florida Realtors Chief Economist Dr. John Tuccillo finds the fear of a shadow inventory overrated.

“The fear … is that the inventory of delinquent and foreclosed loans (will be released onto) an already weakened market,” says Tuccillo. “(But) the reality, even in Florida where distressed properties make up a significant portion of the market, appears to be different.”

Tuccillo says lenders have no reason to flood the real estate market with more homes if doing so would drive prices down and impact the lender’s profit. While some observers worry that lenders were holding back on purpose, Tuccillo says that’s not so – that the large number of distressed properties on hold was “largely the result of confusion over the rules of the game, and thus missteps by the lenders.”

In conducting an analysis, Florida Realtors Research looked at data from MLSs around the state and data provided by CoreLogic, a statistical analysis company.

“We looked at the recent history of distressed property listings and transactions relative to normal market data, as well as estimates for the shadow inventory, and came to some conclusions about the likely course (for the) future,” says Tuccillo.

Conclusions

• Florida remains one of the nation’s hardest hit states for distressed property sales.

• Distressed property sales and listings have declined since late 2010, except for single-family-home short sales.

• Average prices for distressed and normal property sales have been stabilizing.

• In general, Realtors and lenders have learned how to cope with distressed properties in a way that stabilizes the market.

• Florida’s highest percentage of distressed property (compared to total listings) occurs in the I-4 corridor and Southeast Florida; the lowest percentages occur in Northwest Florida.

• Currently, Florida’s shadow inventory was 550,000 units at the end of 2011, a decline of about 9 percent from its peak in the first quarter of 2010.

• Currently, the flow of new seriously delinquent (90 days or more) loans moving into the shadow inventory is offset by the roughly equal flow of distressed sales (short sales and REOs).

• The number of foreclosures and REOs was significantly lower in February of 2012 than one year earlier, suggesting slower shadow inventory growth.

Tuccillo predicts that distressed properties will be a significant feature of the Florida real estate market over the next ten years, but it will be considered just one property type a buyer can consider – one that has its own unique sales techniques and documentation.

© 2012 Florida Realtors®

Since the housing boom of 2006, home prices have fallen about 31 percent. Also, mortgage rates have been hovering at record lows for the past few weeks – in the 4 percent range or even lower on 30-year fixed-rate mortgages, according to Freddie Mac’s mortgage market survey.

“It’s hard to see the possibility of losing on a home purchase right now, with these mortgage rates,” says economist Dean Baker. “Prices may go lower, but not by much.”

The article notes the following scenario: Buying a $300,000 home with a 4 percent mortgage rate and a 20 percent down payment would mean a $1,145 monthly payment. The Mortgage Bankers Association recently predicted that home prices may fall another 3.5 percent by mid-2012, but mortgage rates will increase by a half-point. Under that same loan scenario, a home would sell for $289,000 while the monthly mortgage bill would be $1,171 – only a $26 difference.

For those who can qualify for a mortgage, “playing the waiting game” won’t result in much gain, Nariman Behravesh, chief economist at IHS in Englewood, Colo., told Bloomberg Businessweek.

Source: “Crazy Home Deals Await the Creditworthy,” Bloomberg Businessweek (Oct. 24, 2011)

When you drive down the street, you can see a “for sale” sign on nearly every road. The supply of homes may seem overwhelming at times, and we are definitely in a buyers’ market. But in August, the National Association of Realtors (NAR) reported an 8.5-month inventory level, close to the six-month level that historically signals a balanced market. Even so, there’s a general feeling of uneasiness about the market.

The reason for this anxiety, notes Erica Cross, research analyst with the Florida Realtors, is likely due to “shadow inventory” – homes placed in foreclosure or owned by lenders, and loans overdue by at least one payment. We feel their looming presence, even though a “for sale” sign hasn’t appeared in the front yard.

But how much shadow inventory is out there? The amount depends on its definition. How delinquent must a property be to include it in shadow inventory – 1 day, 90 days? Is it assumed that any of the delinquencies will improve? Are foreclosure properties included?

With all of these different questions, estimates of shadow inventory in March 2010 ranged from 1.7 million to 7 million, according to NAR. The number of homes in shadow inventory is uncertain; more importantly, so is the timing of their exact release to the market.

Shadow inventory going to market

Let’s imagine two scenarios. First, think of a situation where banks slowly release shadow inventory to the market. Foreclosures are currently weighing down home prices, so this trend would continue. But if a balance between those foreclosures coming on the market and those being sold is maintained, market stability will continue. The supply of homes would be restricted.

Now picture a more drastic case. What if banks dumped all of the homes they own on the market all at once? The increase of supply would cause a decline in price, a drop most likely affecting home prices negatively across the board. Since demand cannot respond quickly, the price drop would have a tremendous impact on the market.

In turn, a drop in home prices would have a harmful impact on home equity and consumer confidence, leading to less consumer spending and more of the economic issues we are currently trying to resolve.

Can it be managed?

Banks aren’t the only players in the “disposing of homes” game. Homeowners also control the number of homes in shadow inventory. A homeowner in trouble can decide whether to pay the mortgage, seek mitigation or walk away. Think of it like a bathtub. Currently, the amount of bank-owned homes fills part of the tub. The disposing of homes into the market is like letting the drain open. Homeowners going into foreclosure can add more homes to the shadow inventory – like opening a faucet into the tub. If there is more water (homes) being added by the faucet than there is water (homes) being drained (or sold), the bathtub will fill and overflow. The flooding of the bathtub means that banks can only hold so many homes or they will need to dump homes on the market.

The government affects the supply of shadow inventory through the Home Affordable Modification Program (HAMP). HAMP allows homeowners to modify their mortgage payments to 31 percent of their pre-tax income to make them more affordable. If homeowners meet the HAMP criteria and can reduce the amount of their mortgage payments, they are less likely to default. Stricter eligibility or removal of HAMP would cause more delinquencies and foreclosures. Easier eligibility could prevent delinquencies and foreclosures and lower the shadow inventory count.

What to do

Banks, homeowners and the government can modify their actions to speed up or slow down the amount of inventory added to the current supply. With each player making different moves, the moral of the story is that the timing and number of distressed properties in the market can’t be predicted. We do know it will affect your business, so monitor your local market closely. Communicate with lenders so you know the business decisions they are making, and work with distressed homeowners to help mitigate their debt burdens.

Source: Erica Cross, research analyst, Florida Realtors

© 2011 Florida Realtors®

Here are a few money-saving, pitfall-avoiding tips and tricks for buyers who want to do some smart home shopping this summer.

1. Have a vision in place, before you start your house hunt. Actually, have several visions in place. Have a financial vision, complete with a clear picture of what your total income and expenses look like, in the “after homebuying” view, including what you pay out for your home and related expenses, like HOA dues and homeowners’ insurance. Have a vision of your life in your new home, including what you want to do, with whom and where you want and need to go – in the work, family and recreation areas of your life.

2. Don’t let affordability get between you and reality. High affordability doesn’t necessarily mean you can get every single thing you want – and name your price. The fact is, even people who are spending millions for their homes don’t get everything they want!
Take a step back, revisit your vision, and remind yourself what’s really important. It’s okay to save some “must-haves” and “deal-breakers” for your next home purchase!

3. Get a local expert to brief you on the local market, then screen out the noise. Now more than ever, it’s essential to have laser beam focus on the information and strategies that will get you what you want – whether it’s an amazing deal on the home you’ve always wanted or simply success at becoming the owner of your first home at a price you never thought would ever be possible. Otherwise, you’ll end up all over the place, spending your time, money and sanity attending auctions, getting worked up over distressed properties that aren’t yet for sale, trying to negotiate deals with sellers who are in no position to cut them and having your lowball offers on bank-owned properties rejected time after time.

Once you have a strategy in place, work it – Many would-be buyers lose out on great homes because they take negotiating advice from their neighbor over that being offered by their broker or agent.

4. Read everything. Good faith estimates. Contracts. Disclosures. Inspection reports. Read them when you get them, ask questions, and keep asking until you understand the documents.

Many buyers this summer will make offers on more than one home before they get into contract on “the one,” and many of those properties will be short sales or foreclosures. With distressed properties, every contract is different, so it behooves you not to go on autopilot, just skimming the papers as you might otherwise. Also, inspection reports might reveal red flags and condition issues that you’d normally expect to see in the seller’s disclosures. It’s especially critical, in these situations, to fully understand as much as you can about the property, your loan, and your obligations and due dates under the contracts.

5. Stop your mental accounting and do the actual math – on paper. In the field of behavioral economics, mental accounting refers to the tendency we humans have of doing math in our heads, separating things like easy money (e.g., the so-called “instant equity” from buying a home for less than it’s supposedly worth) from hard-earned wages and salary, and making spending decisions differently from these different mental accounts.

On the scent of a good deal, and in the heat of the hunt, even the most meticulous homebuyer can go up a few thousand in offer price to beat out other buyers. No problem, right? Well, but then when the inspector uncovers a few needed repairs, they make a mental guess as to what they’ll cost, and add that in – again, mentally. Then, when the lender requires a few extra thousand bucks than expected to close, that goes on top, but again, only mentally. And mental money tends to stretch a bit longer than real money does!

Even if you hate budgets with every iota of your being, buck up on this one project, pull out the calculator or open up a spreadsheet and keep track of every line item. Get actual repair bids during your inspection period, to the extent possible, and get your math mojo on.

Keeping a strict tab on the expenses you incur during the transaction – or will need to incur afterwards — will save you so much drama later.

The challenge is how to determine when we have hit bottom if you are a purchaser. The only time you can guarantee a bottom is after you pass it.

However, there is more and more evidence that the COST of a home has in fact hit bottom. Notice we have used the word COST. Unless you are an all cash buyer, you must take into consideration the expense of financing a property to determine the true cost of purchasing the home. Interest rates have increased over the last quarter; and the rise in rates has counteracted any fall in prices.

Let’s look at an example:

Let’s say you were going to take out a $200,000 30-year-fixed-rate mortgage in November of 2010. At that time, interest rates were 4.17% (as per Freddie Mac). Your principle and interest payment would have come to $974.54. According to the most recent report from Case Shiller house prices fell 3.9% in the 4th quarter of 2010. The most recent report from the Federal Housing Finance Agency shows a 0.8% fall in prices. Let’s use the larger percentage decrease: 3.9%.

For the sake of keeping the math simple, we will now say you can get the same house with a $192,000 mortgage (4% discount from November price). Interest rates are now 4.95% (as per Freddie Mac).

Your principle and interest payment would now be $1,067.54.

By waiting to pay less for the PRICE of the house, the COST increased $93 a month. That adds up to $1,116 a year and over $33,000 over the life of the loan.

We realize that there are other things to consider (ex. the mortgage tax deduction, etc.). This example is just a simple way to show that there is a difference between COST and PRICE.

Bottom Line
If you want to buy low, buy now. It appears COST has hit its lowest point.

Reprinted from an article by the KCM Crew

Usually, the buyer makes an offer for a certain price and on certain terms. A reverse offer goes in the opposite direction: from seller to buyer. In some cases, a seller whose home has been on the market for ages with lots of viewers, but no offers, may enlist their agent to go back and approach several or even all of the buyers who have come to see the property, and make an offer to the buyer. In other scenarios, the seller’s agent extends an offer to a particular buyer who has come to see the property multiple times and seems very interested, but has been hesitant to make an offer.

Reverse offers generally offer to sell the home at a price lower than the list price, and they often sweeten the pot by throwing in added incentives like paying some or all of the buyer’s closing costs, buying down the buyer’s interest rate, paying for HOA dues or fees or even throwing property like flat-screen TVs, cars or other valuables into the deal.

Here are 3 best practices for sellers making reverse offers:

• Give the buyers a short period of time to respond. The whole point of a reverse offer is to create urgency where the buyer currently feels none. Extend a reverse offer with the caveat that it is only good for a day or two, to push the buyers into moving quickly. Similarly, if you have extended the reverse offer to multiple buyers, let them all know that this is the case and that the first buyer to bite takes the house.

• Great candidates for reverse offers include sellers facing lots of competition. If your home is nearly identical to neighboring homes for sale at the same price, or you are struggling to position it competitively with foreclosures and short sales in the area, consider making a reverse offer. A proactive, reverse offer differentiates your house in the minds of home buyers and, again, creates urgency to act on the part of buyers who otherwise have so many homes to choose from that they feel they have all the time, choice and bargaining leverage in the world.

• If one buyer has viewed your home repeatedly, check in with their agent directly before making a reverse offer. Ask your listing agent to contact the broker for any buyers who have made more than one visit to your home, to inquire into what is keeping them on the fence. This will boost the likelihood of making a successful reverse offer by making sure the offer addresses the issues that have made buyers hesitant to pull the trigger.

Critics of the reverse offer express a concern that it may make a seller seem desperate. However, when you talk to home buyers on today’s market, their biggest beef is sellers who are unrealistic and inflexible, not sellers who seem overly motivated to sell.

No serious home buyer gets turned off by a seller who seems willing to go the extra mile to help them solve the problems that are stopping them from buying a home. Also, a reverse offer doesn’t have to chop tens of thousands off the home’s list price to work – a percentage point or two can often do the trick. In any event, sellers who extend a reverse offer don’t limit their options for responding to low-ball offers from the prospective buyer in any way; if the buyer senses desperation and comes back with a low ball offer, the seller can still take it, counter or leave it, just like they would have been able to do before making the reverse offer (but they end up with a buyer, which they didn’t have before the reverse offer).

Note: This post first appeared on WalletPop.com on 11.22.2010.

The following list outlines a few tax benefits of homeownership, according to Stephen Fishman, an author and lawyer who specializes in small business, tax and intellectual property law.

▪ Home mortgage interest deduction: Homeowners can take an itemized deduction on interest paid on a mortgage or mortgages of up to $1 million for a principal residence and/or second home. This deduction could potentially reduce the cost of borrowing by one-third or more.

▪ Property tax deduction: Homeowners can deduct from their federal income taxes state and local property taxes paid on the home.

▪ Deductible homebuying expenses: Several closing costs in a home purchase are also deductible, such as loan origination fees (points), prorated interest on a new loan and prorated property taxes paid at settlement.

▪ $250,000/$500,000 home-sale exclusion: Homeowners who have lived in their home for two of the prior five years prior to sale do not have to pay income tax on the majority of their profit – $250,000 for single homeowners and $500,000 for married homeowners who file jointly.

▪ 14 days of free rental income: Homeowners can rent the home up to 14 days during the year and pay no tax at all on the rental income.

Source: “The Tax benefits of homeownership,” Inman News (Feb. 4, 2011)

http://www.trulia.com/real_estate/32034-Fernandina_Beach/

At the Verandah, guests can dine on a menu of fresh seafood, chops or daily specialties while enjoying views of the natural canopy of oaks or the tennis courts of Racquet Park at the Omni Amelia Island Plantation.

Open nightly from 5:30-9:00 p.m.

Verandah Special Features*: Available Monday, January 31 – Thursday, March 3rd, 2011

Monday – Buy one entrée, get another entrée of equal or lesser value free.
Tuesday – BYOW-Bring your own wine and we will waive the corkage fee.
Wednesday – 50% off one appetizer or dessert with the purchase of an entrée.
Thursday – Wine Tasting from 5:30pm-6:30pm at the bar with 50% off featured wine.

*Specials may not be combined with any other discount or offer.

Verandah Happy Hour – Beginning Friday, February 25, 2011, the Verandah Restaurant will begin opening at 4:30pm for a happy hour at the bar. Daily from 4:30pm – 6:00pm Happy Hour in the bar will feature a new bar appetizer menu, $5.00 wines by the glass and $4.00 Omni well cocktails.

BLENHEIM, Ontario – RM Auctions, the official auction house of the Amelia Island Concours d’Elegance, is set to continue its strong track record in Florida, March 12, when it returns to the prestigious Ritz-Carlton Hotel for its annual Amelia Island sale.

Now in its 13th year, the well-established auction will showcase over 100 quality motor cars, spanning a century of automotive design, from a wonderful series of early Brass Era cars to elegantly styled British and American road and racing cars and European sports cars. Reflecting the international flavor of consignments, notable early entries include: an ultra-rare 1911 Rolls-Royce 40/50hp Silver Ghost Open Drive Landaulette; a superbly-restored 1930 Duesenberg Model J Convertible Coupe with Murphy Coachwork (J331); and an elegant 1938 Peugeot 402 Darl’mat Leger “Special Sport” Roadster.

“RM’s Amelia Island sale has earned a reputation over the years as a highlight on the annual collector car calendar,” says Rob Myers, Chairman and Founder, RM Auctions.

“Backed by a strong track record, our 2011 sale is shaping up to be another not-to-be-missed event. With an emphasis on great automotive styling from across the decades, the sale will combine a high-caliber roster of automobiles with the first-class presentation and unparalleled client service for which RM is known.”

For those with a penchant for early automotive design, the 1911 Rolls-Royce 40/50hp Silver Ghost Open Drive Landaulette, chassis number 1797, leads a string of Brass Era automobiles signed to the sale. A very rare and desirable early Silver Ghost, chassis 1797 was originally a Derby trials car and then used for the London Open Trials. It was later restored by renowned Silver Ghost restorer David Hemmings and shown at Pebble Beach and Meadow Brook, where it won its class at both events. (Estimate: $400,000 – $600,000.)

The Model J Duesenberg has long been regarded as the most outstanding example of design and engineering of the classic era. Introduced in 1929, its announcement halted trading on the New York Stock Exchange. At $8,500 for the chassis alone – a price that approached $20,000 with coachwork – it was by far the most expensive car in America when introduced. The example signed to RM’s Amelia Island sale – a stately 1930 Duesenberg Model J Convertible Coupe with coachwork by Murphy, J331, is an extraordinary example of one of the most desirable Model J’s available, the Murphy Roadster. Superbly restored with its original engine, it carries an auction estimate of $900,000 – $1,100,000.

With its swooping lines and fully-skirted fenders, the 1938 Peugeot Darl’mat Leger “Special Sport” Roadster is another wonderful example of great automotive styling poised for RM’s Amelia Island auction stage in March. Considered one of the most desirable Peugeots produced, it is the result of a collaboration between Emilie Darl’mat, one of the world’s largest Peugeot dealers at the time, designer Georges Paulin and coachbuilder, Marcel Pourtout. One of only 53 roadsters built, and one of the preferred 1938 cars built on the Legere chassis, this striking example has been shown at the prestigious Pebble Beach Concours d’Elegance where it was featured as part of a class that was a tribute to Paulin and Pourtout. (Est. $350,000 – $500,000).

Photo Courtesy of RM Auctions
In addition to these exciting consignments, RM Auctions will build on its reputation as the specialists for private and estate collections at Amelia Island, presenting the distinguished collection of Jack and Marilyn Tallman. As respected enthusiasts who have been involved in the hobby for many decades, the Tallmans have assembled an outstanding collection of cars, many of which they’ve owned for over 40 years and have enjoyed and driven in countless events and tours, both at home and overseas. In total, 11 automobiles – spanning over 30 years of design – will be offered ‘without reserve’. Highlights include: a 1912 Packard 6-48 Runabout, built new for the Packard President and originally used as a promotional car (Est. $300,000 – $400,000); a 1903 Cadillac Model A Rear-Entrance Tonneau, which comes to market for the first time in 40 years, having completed the London to Brighton run on two separate occasions (Est. $75,000 – $100,000); and a handsome, multiple award-winning 1930 Cadillac V16 Roadster, originally built as a show car (Est. $350,000 – $450,000).

RM’s Amelia Island sale acts as a prelude to the world-renowned Amelia Island Concours d’Elegance, returning March 13. Combined, the events make for an ultimate vintage car weekend for automotive enthusiasts.

For further information on RM’s Amelia Island sale and a frequently updated car list, please visit www.rmauctions.com or call RM Auctions at (519) 352-4575. For further information on the Amelia Island Concours d’Elegance, please visit www.ameliaconcours.org or call (904) 636-0027.

Event Details – RM Amelia Island

Sale date:
March 12, 2011, Auction commences at 11am EST

Preview dates:
March 11, 2011, 9:00am – 6:00pm EST
March 12, 2011, 9:00am – 6:00pm EST

Location:
The Ritz-Carlton, 4750 Amelia Island Parkway, Amelia Island, FL, 32034

Admission:
An official auction catalog is available for $100 US and provides admission for two people to the preview. Bidder registration is $200 US and includes an official auction catalog and admission for two to the preview, reception and auction.

For those unable to attend the event in person, Internet, absentee, telephone and iPhone bidding options are available and the auction will stream live online at www.rmauctions.com to provide real-time coverage of the event.

Related Posts:
RM Auctions Return to Concours d’Elegance$19.3 Million Sold at Auction on Concours d’EleganceBest of Britain Coming to Collector Car AuctionCollector Vehicles a Good InvestmentRare European Vintage Cars for Sale at Concours