We hope 2016 was a good and memorable year for you. As we enter 2017, we wish you the full optimism, energy, and momentum that come with the arrival of a brand new year. Does real estate figure into your 2017 new year’s resolution? We hope so. Here are some suggestions for consideration in your real-estate related resolutions:
We sincerely wish you a happy, healthy, and prosperous new year. As always, if you have any real estate related questions, give us a call! We are happy to discuss real estate topics even when it’s not business.
Also, we love referrals!
Take care!
Happy December! It’s that time of the year again. We want to wish you a very happy holiday season. May it be filled with joy, warmth, and goodwill.
We want to thank you for your trust and support this year. We helped over 75 families with their home purchases and sales this year. In 2016, many of our clients have upsized, downsized, bought a first home, relocated, bought an investment property, or sold an investment property. Whatever the purpose and reason, we are honored to have been a part of the journey. Each and every journey we took with clients was special and memorable in some way. We believe in home ownership and real estate investment. We are grateful to have been entrusted to be the guides in achieving your real estate goals.
Looking back in 2016, Orlando continued to enjoy a healthy, stable, and mature real estate market. As I have said throughout the year, the market behavior depends on the price segment, and of course, the location. The October median price of a home in Orlando is $205,000. The average price is $247,200. Homes doubling this price move slower but homes below this mid-200’s average price are in short supply. New constructions do not alleviate this shortage because it’s difficult for today’s builders to bring the cost down low enough to be in that market segment. So the pressure and challenge continue for first time home buyers and entry-level home buyers.
Those that bought a home in 2016 will probably enjoy the lowest mortgage interest rates that we will see in some time. After the November election, the average mortgage interest rate jumped and reached above 4% for a 30-year loan. This will be one of the most important factors to shape the 2017 market. Some first-timers may be priced out of an already challenging market segment. Stay tuned for my market outlook in January 2017.
On the positive side, 4-5% is still an incredibly low interest rate. Those of us that have been around a while can certainly remember much higher rates. We are used to this prolonged low interest rate environment but we will no doubt “survive” as rates rise higher.
Be ready for a slower market.
On the positive side (again), Orlando is #7 on the Realtor.com’s 2017 projected top 10 housing market. It’s never a dull moment in the Orlando real estate market.
If you have been thinking about buying a home, don’t wait any longer. Get in touch with us to formulate an action plan. We plan to hold a first-time home buyer’s workshop in January to help. Let us know if you are interested so we can get a headcount.
I’ll stop here. We sincerely wish you a truly wondrous holiday season. May you enjoy the fruits of your labor and the warmth of loved ones in the remainder of this year.
Yien and The Yao Team.
Happy October! While we are hoping for the starting of cooler weather, Hurricane Matthew, the first Atlantic hurricane to reach Category-5 since 2007, is wracking havoc in the Caribbean. Even though it’s projected to be much weaker by the time it approaches us, this brings back the memory of the 2004 hurricane season.
With this issue, we want to share with you a free handbook, called the “Florida Homeowners Handbook to Prepare for Natural Hazards”.
Click here to open the Handbook
This handbook was produced by UF storm-preparation expert Mike Spranger and colleagues.
We have seen many hurricane guides. This one is an impressive reference you should keep.
The 140-page guide does more than suggest an amount of water and batteries to have on hand if a hurricane threatens. It spends about 50 pages explaining how to prepare a home in the short term and how to boost its ability to withstand high winds long before any make landfall. It not only explains how to install plywood shutters, for example, it talks about the material to use, fasteners to consider and different methods of installation.
According to Spranger, Florida residents should have a storm supply of three days’ worth of nonperishable food and a five-day water supply (one gallon per person per day) if a hurricane is expected. An even better goal, he suggests: a five- to seven-day supply of nonperishable food and a seven-day water supply of three gallons per person per day.
“The very most important things people want after storms are water and ice – and that’s the very first thing that’s going to be in short supply,” Spranger says.
Hurricane season begins June 1 and ends Nov. 30, but the 140-page handbook reminds readers that hurricanes and tropical storms can form earlier and later.
The handbook has many tips and suggestions for Floridians, such as keeping spare cash handy in case ATMs aren’t working, hanging onto at least one hardwire telephone in case cellular service goes out, keeping your gas tank full, and specific ways to shore up windows, doors and garage doors (Interesting fact: about 80 percent of wind damage to homes starts with wind entering the garage).
Also included are reminders to have a plan for pets since most emergency shelters won’t accept them; keep prescriptions filled and copies of them in a waterproof box or folder, along with one’s other important documents such as birth records, insurance policies and records of home valuables; as well as suggestions for storing sentimental items like family photos, digitally, in case a home computer or other electronic gadgets are destroyed.
Even if you implement only a few of the ideas in this handbook, you’ll be ahead of most people.
We will stop right here. Hope you have a safe and fun October! As always, if you have any real estate related questions, give us a call! And, we love referrals!
Until next month, take care!
I hope you had a great August. If you have school-age children, I hope the transition back to school was smooth. Now that we are in September, we are preparing for a new seasonal phase of the Orlando Real Estate Market.
By the way, we are also in the peak hurricane season right now. For important information on buying or selling a home during hurricane season, please read my September 2015 blog. You can also see any of my other previous blog posts by clicking on “Orlando Real Estate Journal” on the top menu bar.
The summer peak season is behind us, buyers who are looking to purchase a home towards the end of the year are now emerging.
Buyers now have more tools than ever to aid their home search on the internet. There are many websites that allow you to search for homes for sale. However, these sites are not all created equal. The key to a good search site is the validity of its data. The gold standard is one based on professional MLS (Multiple Listing Service) data. (For how MLS works, please read my March 2016 blog). I would like to invite you to try such a search engine on our website www.TheYaoTeam.com.
The professional MLS data is maintained and policed for its accuracy. Member agents face fines and penalties from the Board for inaccuracies and outdated information. There is nothing else like this on the internet. 3rd party websites scavenge their data from many miscellaneous sources and do not have an effective way to check and monitor their quality. We routinely get buyer inquires about fraudulent listings on 3rd party websites. For example, a home listed for $400,000 in the MLS can show up for half that price on sites like Zillow and Trulia. This wastes everyone’s time, and worse, subjects buyers to potential scams.
This also highlights why it’s important to have buyer representation when you are looking to buy a home. The online search is only the first step. A professional agent is your eyes and ears for buying the right home. We screen the vast amount of information online, and separate out for you the real information from the fluff. We are your advocates in the entire process. There are many intangible things that can make all the difference in your home buying process. “Exceptional Service” is our team motto. We consider your trust an honor, and always strive to do our utmost for you.
I’ll stop here. Until next month, take care!
Happy August! In the blink of an eye, summer break is almost over. Kids are getting ready to go back to school. Hope you have enjoyed this summer. You might be interested to see the real estate market snapshot in the Orlando area. The latest data from the Orlando Regional Realtor Association include June.
The sales stat in this chart goes back 13 months, allowing year-to-year comparison. The latest median price in Orlando MSA is $207,000 (exactly half of the homes sold are above this price, and exactly half the homes sold are below this price). This is 15% higher than the median price of $180,000 for last June. Our average sale price is $251,600. This is 14.5% higher than the average price of $219,700 for last June.
This is an entire market’s average of course. I’ve described different market performance based on price range before. General rule of thumb in 2016 is: lower the price, hotter the market; higher the price, cooler the market.
Please note the black line denoting the number of sales. We are holding steady at 3,513 home sold, vs. 3,603 homes sold last June. Our inventory level has been holding steady this year between 10,000 and 11,000 homes for sale (see the graph below).
One market factor of major importance is mortgage interest rate. Despite prior industry predictions, the mortgage interest rate remains incredibly low (see the graph below on the 3-year Average Monthly Mortgage Rate). This helped fuel the 2016 real estate market momentum. Remember the rule of thumb: for every 1% decrease in interest rate, a buyer’s purchasing power increases 10%. The recent global economic uncertainty continues to hold down the interest rate (for now). Next year may be a different picture; we will have to wait and see.
We have helped many clients buy and sell homes this year, including upsizing and downsizing. If you are thinking about buying or selling a home, give us a call to discuss the right strategy in a market like this.
I hope you are enjoying your summer. We are entering the month of July, the last month in Orlando’s peak real estate season. If you are still in the market to buy or sell a home, give us a call without delay! We will provide timely insights that you may find helpful.
Q: I have made offers on several homes without success. What will help me in a multiple offers competing situation?
A: I can completely sympathize with your frustration. If you are currently looking to buy a home below $250,000, the competition can be fierce. If the home is well presented and priced properly, your chance of competing with other buyers in a multiple offers bidding situation is very high. Although there is no magic bullet that can guarantee your offer is accepted, as a listing specialist, I can share with you the factors that the sellers consider when they are choosing from multiple offers.
Basically, sellers are looking for the highest net price and the smoothest transaction, with the least amount of hassle and uncertainty. So keep these factors in mind when you structure your offer.
Price: this is the 1st item a seller looks at, but not just at the offer price but the net. If you ask the seller to pay for things such as your closing cost, a home warranty, repairs…etc, they will be deducted from the price.
Financing: the seller is looking for confidence that a buyer will successfully achieve loan approval to complete the purchase. There is nothing more frustrating for a seller than to wait 45 days only to learn the buyer’s loan is denied. Therefore, cash is king. Conventional loan is next, with more down payment the better. Whatever your financing type or terms, be sure you have a strong pre-approval letter from a reputable lender. You want to show the seller you can get the loan.
Escrow Deposit: this is also called good-faith money. This shows the seller how much you are willing to forfeit if you do not come to the closing table. An offer accompanied by a small deposit is considered not serious. You want to show the seller you are serious.
Closing Date: the seller is looking for a date that works the best for his/her situation. Your flexibility to accommodate the seller’s needs can work in your favor.
Contingencies: these are conditions under which a contract can be cancelled. More contingencies you build into your offer, less certain the closing looks to the seller.
Concessions: make your offer as “clean” as possible. Don’t ask for things that are not vital to you. Concessions can be items such as washer and dryer, or requests such as “refinish the pool surface”. Between 2 similar offers, the seller often chooses the one that asks for less.
Offer Presentation: Be sure your offer is presented in the most professional and timely manner. I regularly receive offer packages that are incomplete or incorrect. Make sure your offer has a correctly filled out contract, all required forms, as well as a valid pre-approval letter.
Finally, there is nothing more regretful than to learn the seller has chosen another offer, while you’re willing to pay more for that home. Remember a seller is not obligated to respond to offers in the order they come in. In a multiple offers situation, you may not get a counter-offer or a chance to improve your offer. You may want to consider making your highest-and-best offer up front to beat out the competition.
Of course, these are very general tips. Each of these can be an article on its own. They interplay on multiple levels in negotiation. Your agent matters. Having the right representation is crucial.
Best of luck to you. Hope you will achieve contract and be in your dream home soon!
Please feel free to email me your real estate questions directly to Yien@TheYaoTeam.com. I answer them daily. If I use your question in my articles, your confidentiality is always guaranteed!
Q: We are trying to sell our home. We have an offer from interested buyers but they have to sell their home first. Is this common? Should we accept it? What are the risks?
A: Yes this is actually a common occurrence now. In a healthy real estate market lots of homeowners are upsizing or downsizing. We’ve managed many such cases in the recent 3 years. It’s important to know there are 2 distinct types of contingencies where the buyers have to sell their home first before they can qualify to buy a new home.
1) Contingent on the buyers “SELLING” their home. This is when the buyers’ own home is not yet under contract. Sometimes it’s not even listed yet (many buyers do not want to list their own home until they find the home they want to buy). We typically recommend against this type of contingency because of its uncertainty, unless sellers are willing due to (a) sellers’ home is a unique property with limited potential buyers, (b) sellers are not in a hurry, AND (c) the buyers’ home is more sellable. For example, lower price point homes generally sell easier and faster than higher price point homes. The experience and reputation of the buyer’s agent should also engender confidence in performance.
2) Contingent on the buyers’ own home “CLOSING”. This is when the buyers’ home is already under contract. This is quite a different situation and is something we work with frequently. We would request a copy of the buyers’ own contract and their buyer’s financial qualifications. We would evaluate the details and status of their contract to assess the solidity of that transaction. This is a much better proposition. There is an actual proposed closing date and other timelines where progress can be monitored.
The risk of accepting such contingency is you can wait several months and end up with a cancellation due to circumstances outside of your, and your buyer’s, control. You can even miss a peak selling season while waiting. So, if you receive an offer with one of the above contingencies, there are also a number of ways to counter. One of the options is what we call a kick-out clause or first-right-of-refusal clause. If such a clause is accepted by the buyers, the conditions are:
1) The listing remains ACTIVE in the MLS, with required language disclosing the existence of the current contract. Agents may request showings and submit offers normally. (Caveat: once in this status, our experience shows that showings decrease, because many buyers do not want to be a “back-up”)
2) If a legitimate offer comes in, the sellers can negotiate it into a bona fide back-up contract. The first buyers then have a finite time window to either back out or place additional deposit and waive all remaining contingencies.
3) If the first buyers back out, sellers can continue the new contract with the second buyers. If the first buyers do not back out, the additional non-refundable deposit provides further assurance to the sellers that they will close. Of course we always assess the situation to see if the buyers can back up their claim.
I have to stop here. I hope this is a helpful read to you.
Until next month, take care!
Happy month of May from The Yao Team! The tax season is now behind us. We are entering the last month of spring and preparing for the fast approaching summer, traditionally the peak season in the Orlando real estate market. We are seeing increased activity ramping up towards the summer.
Orlando is experiencing “ multiple markets ”. Different market segments are behaving in different ways. Homes priced below the mid-$200k’s are in the highest demand due to the affordability factor. First time home buyers are competing in bidding wars on good homes. In higher price ranges, less demand is resulting in more fierce negotiations. In the luxury market, we are even seeing some price declines. Each geographic area performs differently as well.
It’s important to have an expert help you evaluate your particular situation so the best decision can be made on your purchase or sale. We meet regularly behind the scenes to discuss and seek out advantages for our customers in real estate transactions.
If you are looking for an experienced and dedicated team to represent you, give us a call today. We would be honored to help you achieve your real estate goals.
Until next month, take care!
Happy Spring! The Orlando real estate market is approaching full swing. Lots of buyers and sellers are active in the market place now. Starting this month, I’ll discuss the topic of home valuation.
Q: How do you determine the market value of a home?
A: There are generally 3 approaches to market value theory in real estate: (1) comparable sales (2) reproduction cost (3) income potential. In residential resale, comparable sales approach is the method of choice. It uses completed sales to determine the market value of a property. Assuming the market is efficient and the buyers and sellers act in their own best interest, we can derive value based on how sellers are selling and buyers are buying. Like stock prices, the supply and demand ultimately drive the fluctuation in price: when demand exceeds supply, the price goes up. When supply exceeds demand, the price goes down. A property does not have a fixed market value. Its market value changes with time.
Unlike shares of a company’s stock, no two pieces of real estate are exactly alike. Comparable sales approach takes the available sales that meet the right criteria (sufficiently similar to the subject property, sufficiently close to the subject property, and sale date recent enough to reflect the current market) and compare them to the subject property. Adjustments are then made based on established guidelines as well as subjective judgments to increase or decrease the value. For example, if a home that backs up to a road sold at a particular price, an otherwise identical home across the street that backs up to a wooded conservation would be presumed to be able to fetch a higher price (the value adjustment for the conservation frontage). A common feature in Florida homes is the swimming pool. We presume a home with a pool sells for a higher price than an identical home without the pool.
Two crucial factors in doing the comparable sales method correctly are: (1) Selection of appropriate comparable. If wrong comparables are used, however diligent the subsequent adjustments may be, the results will likely be off. For example, Stoneybrook sales should be used for comparables to a Stoneybrook subject property, not Eastwood or Avalon Park. (2) Use right adjustment values. Even when the right comparables are selected, if the adjustment values are improper, the result will be off. For example, once comparables similar in size are selected, the adjustment for difference in square footage is not what general public may expect, it may only be $30-$60 per square foot based on price range of home.
Licensed appraisers are trained to do this based on their professional guidelines. These guidelines are adhered to in order for the appraisal report to be valid and accepted by the bank which uses this report to assess its risk in making the loan on the property.
Real estate agents are not licensed appraisers. Their approach should start in the same objective manner as an appraiser, but there are many additional factors to consider. Many features in a home have different values to a buyer than to an appraiser. For example, top-of-the-line appliances in a kitchen will certainly impress a potential buyer, who may be inclined to pay more for this home than a similar one without them, but an appraiser will not appraise the home higher because of the better appliances. Appliances age and break, and they can be easily removed. They are personal properties that happen to be in the real property.
So, a skilled listing agent considers all the tangible factors such as features and amenities, as well as intangible factors such as appeal. He/she estimates what a normal buyer would be willing to pay based on the current market environment. An understanding of market trend is paramount. In an up-trending market, the last home that sold in the area is the base on price. In a down-trending market, the last home that sold is the ceiling on price. In a stable market, the last home that sold is a mirror on price.
I have to stop here. I hope the above description is helpful to you. For more details or an evaluation of your home, you can always call or email us.
Until next month, take care!
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