The Pros and Cons of Investing in Vacant Land

Q: I’m thinking about investing in vacant land. What are the pros and cons of investing in undeveloped land? A: Investing in vacant land is VERY RISKY.  It’s important to do your homework first. Here are some things to consider when considering land. How much return do you want on your investment? Getting a return on undeveloped land can take a long, long time. Be clear about what you want from your land investment. Research development trends in the area you want to buy in. City and County planning divisions can help with that. If it looks like the area is slated for growth, you may see your land value go up. If you want land for your own recreational or future use, make sure it is zoned for what you want. How will you pay for the land? It can be difficult to get a loan for vacant land. If you CAN find one, be prepared to make a large down-payment and understand that the interest rate will be higher than average. If you’re able to make a cash purchase, do so with the understanding that it could be a long time before you can get that cash back. If the land is for recreational use, consider crowd-funding the purchase with people you like and trust. It’s a easy to set up a schedule of who can use the land when and it avoids long-term interest on the purchase. Factor in your incidental costs If you’re paying cash for the land, don’t skip the survey. It’s important to know what you’re getting and what your limits are. Also, remember that property taxes will be due every year. Depending on where you purchase the land, you may be required to maintain it. Check the local codes and abide by the usage rules to avoid costly citations and fines. Vacant land is generally a long-term investment. It requires solid research, and even then, it can be risky. Work with an expert to make sure your investment works for you. You know the one! Call me today to start your land investment journey! Start Your Vacant Land Search Here

Florida Homeowners See More Options for Insurance

At last! Florida homeowners have more options for homeowner’s insurance! As what is predicted to be an “above-normal” hurricane season began June 1st, many insurers in Florida have been dumping policies to avoid the high risk. Luckily homeowners have several new insurance options in addition to the companies already  writing policies in Florida. In fact, Florida is the only state where new insurers are entering the market at high volume. Says Mark Friedlander, spokesperson for the Insurance Information Institute, Insurers feel they can profitably write home insurance in Florida due to the legislative changes that eliminated the drivers of legal system abuse and claim fraud that led to our state’s risk crisis.” And here’s the best part: more insurers in the marketplace often leads to more competitive premiums. This could mean lower rates for Florida homeowners. Now that there are more options, homeowners can shop around for coverage instead of being stuck with little coverage, high premiums and high deductibles - something Floridian’s haven’t been able to do in the last few years. Jeff Brandes, a former state senator and tireless advocate for insurance reform in Florida, says many of the “new” companies are not actually new. He says, some are spinoffs or subsidiaries of existing Florida companies, while others are new to the state or are reactivating their presence here.” Four of the new insurers are following a model known as a reciprocal insurance exchange. In an exchange, policyholders (subscribers) are considered owners and insurance claims are paid out of something like a mutual fund. Subscribers pay into the fund and then assume each other’s risk. If a subscriber has to file a claim, each policy is charged an equal amount to cover the loss. If the losses are low, then subscribers receive a share of the profits. Subscribers generally have lower premiums and they have a say in the operations of the business. The downside: If there aren’t enough subscribers, premiums can go up. As always, it pays to shop around. Make use of your resources such as a reputable insurance agent, your favorite Realtor® or recommendations from family and friends. Source: https://www.orlandosentinel.com/2024/05/24/florida-homeowners-finally-have-some-new-insurers-to-consider/  

Who Will Pay Buyer Agent Commissions? - Ask a Realtor®

A: The short answer is, “We don’t know”. You may have heard on the news that the National Association of Realtors® (NAR) and several large real estate brokerages recently agreed to settle a class-action law suit which will force agents to lower their commissions. The details of the case are long and boring, but let’s just say that in response to this settlement, we in the residential real estate industry will be changing the way we do things. This does NOT mean, however, that commissions will be going down. To understand why I say this, it’s important to understand how buyer agents earn their commissions. Currently in the state of Florida, when a homeowner lists their property for sale the entire commission is paid to the listing agent. Sellers do not pay the buyer's agent commission over and above the listing agent’s commission. The listing agent collects a commission at closing and shares that commission with the buyer’s agent. This might be the single-most important step in marketing a property - even more important than putting the property on the internet or putting a sign in the yard. Here’s why. Real estate agents are paid on commission only. No matter how many hours we work at our craft, we don’t get paid until a sale is closed. With that being said, if a buyer’s agent has to make a choice between showing a house that is not offering a commission and showing one that is offering a commission, which one do you think they will give priority to? Yes, there is talk of buyers paying their own agent commissions, but the vast majority of buyers struggle with their down-payments and closing costs. Adding the commission will make home ownership even more difficult for most. They too will focus on listings that will compensate their agent. Will buyers stop using buyer’s agents? Maybe. But that would be like going to court without a lawyer and hoping the prosecutor goes easy on you. Everyone should have their own representation. You know the one! Call me today to learn how I protect the interests of buyers AND sellers!

Study Says Cash Buyers Pay 10% Less

You’ve heard that old saying over and over again; “Cash is king”, but in case you had any doubts a recent study tells us that sellers would rather leave money on the table for an all-cash offer than risk a lost sale because a mortgage falls through. The study from the University of California San Dieo Rady School of Management says sellers would rather trade cash for convenience when it comes to the sale of their property. Cash buyers often forego inspections and even appraisals - two of the most challenging aspects of getting a loan from a mortgage lender. Says Michael Reher, co-author of the study, “When sellers accept a mortgage offer, it comes with risk.” In fact, 10% of all transactions involving a mortgage fail. Sellers are often willing to accept less for their property to avoid that risk. This doesn’t mean that all financed buyers pay 10% more. Those with a good borrowing profile pay about 6% more than cash buyers, especially in markets where most real estate transactions are successful, like here in Central Florida. Low-income buyers pay the most as their mortgage transactions are considered riskier. On average these buyers pay up to 17% more if they have to compete against an all-cash offer. Per study co-author Rossen Valkanov, one third of home purchases are all-cash deals, making these differences extremely impactful.  Says Valkanov, “In policy terms, U.S. taxpayers subsidize $8 trillion of mortgages to promote homeownership. If policy makers made it easier for mortgage buyers to close escrow, it could be a more cost-effective route to promoting homeownership than subsidizing mortgages for first-time homebuyers.” As more buyers with deep pockets enter the market paying cash to avoid high interest rates and to take advantage of the 10% “cash discount”, there are a number of implications for the real estate market. For one thing, the average age of first time home buyers is going up, meaning younger people can’t or are opting not to compete for homes to purchase. Secondly a market with more cash buyers may erode the value of real estate making it a less attractive savings option. Valkanov goes on to say that one solution might be to educate sellers about the home buying process. Making sure that sellers are well-informed about the risks and rewards of cash versus a mortgaged offer could give mortgaged buyers a leg up in the competition. In markets where transactions have a high closing ratio, well-qualified loan applicants who can close quickly and can offer more than a cash buyer, may have a better shot of getting an offer accepted. Source: https://www.floridarealtors.org/news-media/news-articles/2024/04/study-all-cash-buyers-pay-10-less