Tallahassee Real Estate Blog

I have been posting the Tallahassee real estate market charts on the Tallahassee real estate web site for the past week. In doing so, I and many readers were observing that the following chart is a bit baffling.

As we can see above, it appears that prices are rising…. yet we know inventory has risen and unit sales have fallen. What we expect to see is some downward movement on prices. I asked readers of this blog (and others) for opinions on why this was happening and really none of us had a good answer…..

UNTIL

Gooch recommended we look at price per square foot. He reasoned that maybe consumers were able to buy more expensive homes due to falling interest rates, but that maybe they were getting more house. So, this next chart is what  Gooch requested. It shows residential home sales in Leon County by price per square foot, across different price ranges.

Gooch, prices are indeed falling. While this is not the best news in the world, it certainly makes sense with unit sales being down.

So, how are the current asking prices for Tallahassee homes reflecting this?

As we can see from this, with few exceptions, there are many price ranges that have a majority of their homes over-priced. It appears that homes priced between $150K and $200K are priced very reasonably, while homes in higher price ranges seem to be off the mark quite a bit.

Just remember, in every market, their are unrealistic Sellers who ask more for their home than the market is willing to bear. They make the “average” asking price much higher than it would be if only serious sellers were in the market. Today, you can definitely find the serious sellers out there. They are the ones that have their homes priced well below their competition.

As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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We are helping somebody sell a home in Tallahassee who is considering an offer from a Buyer that includes a lease-purchase provision. A lease-purchase in Tallahassee is an agreement where the Buyer and Seller agree to a sale on the home and then the Buyer rents the home from the Seller, prior to closing. The closing could happen as quickly as 1 day, or could be extended for a long period of time (even years in some cases).

So, why would a Buyer offer to do a Lease-Purchase? Why would a Seller consider accepting a Lease-Purchase?

A Lease-Purchase can be a very beneficial “win-win” opportunity for the right Seller and the right Buyer. Some of the reasons that they might conspire to do a lease-purchase contract include:

Typically, home buyers see the benefit of a lease-purchase right away, as they are in a position to need a creative solution to buy a home in Tallahassee. Often times though, I find that Tallahassee home owners are not so quick to see the benefits of a lease-purchase to help them out of their situation. I hope that some of this blog can help Tallahassee homeowners understand that they too have creative options.

As a Seller, most people would prefer to get cash for their home and then just go along their merry way. Unfortunately, in today’s real estate market, less than a third of homes listed for sale in Tallahassee this year will sell! That means 2/3rds of our homeowners will fail to sell their homes. So, in case that you are one of the not-so-fortunate ones, what are your options?

• Lower Your Price
• Take Your Home Off the Market
• Lease Your Home
• Give the home to the bank
• Sell Your Home With Creative Financing

Obviously, cash in hand is the favorite option. But when that fails, the other options must be considered. The lease-option will allow you to move from your home and reduce the cost of continued ownership. If you absolutely need to move, the benefits listed above will apply to you. You can lock-into a sales price, get higher than market rent, cash a non-refundable deposit, and eliminate maintenance costs. Additionally, when you let the market know that you will sell your home through a lease-purchase, you increase the size of the market for your home, thus making it more valuable (you will attract all the buyers you would have attracted before, plus buyers who need creative financing as well). And don’t forget, you can use the lease-purchase method of buying your next home as you wait for your tenant/buyer to close on the sale of your Tallahassee home!

But what about the additional risk?

There is definitely additional risk selling a home through a lease-purchase. A party could agree to buy your home, move in, and then never close on the property. They could even destroy the property while never paying you rent, forcing you to evict them from the property. While this scenario sounds horrific (and it most likely would be), there are many things that you can do to mitigate the risk of this occurring.

• Make the Buyer submit a full loan application (Download Free FNMA Uniform Residential Loan Application)
• Seller review the loan application and make own determination of credit risk
• Collect a non-refundable deposit large enough to motive the Buyer to close
• Make the monthly rent payment higher than market rate, with the excess to be credited to Buyer at closing
• Make sure separate purchase agreement and lease agreement (lease agreement drawn by attorney in accordance with Landlord-Tenant Act)

Ultimately, we are going to see a strong return of the lease-purchase agreement as creditors tighten borrowing standards and inventories remain high. Don’t be afraid to consider a creative solution if it partially solves your Tallahassee real estate problem!
FNMA Uniform Residential Loan Application Form 1003

As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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I was asked by a reader why I felt so strongly about now being the right time to buy a home in Tallahassee. My response is a bit long-winded, but simple to understand.

Unless you are one of the fortunate few who can buy a home in Tallahassee without borrowing money, the cost of the money that you borrow is one of the greatest costs that you pay. In order to see this better, I created a simple scenario. Let’s assume that you want to buy a home in Tallahassee for $250,000. Let’s say you sell your previous home and use the proceeds of $50,000 as your down payment, thus financing $200,000 in the new home. Your monthly payment (principal and interest), would be as seen in the table below (payment changes for different interest rate):

In this example, we can buy a $250,000 home with a monthly payment of $1,136.

So why is now such an important time to buy? Because rates are going to go back up. In the early 1980s, we saw rates at 20%! So what does this mean to a family wanting to buy a home in Tallahassee? Let’s take a look at the purchasing power of that $1,136 per month at different rates. Today, it buys a house of $250,000. When rates go up to 9%, that same payment will only buy a $176,400 house!

So, even if you think home values might come down (even as much as 20%), your monthly cost of ownership is cheaper now than it would be. I do not believe that properties in this price range will come down 20%, but even if it were true, and you plan on living in the home for more than five years, you will save money by buying now.

If you like this Article then please subscribe to my full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe by Email.

As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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I have written numerous blogs that have looked at the performance of different Tallahassee Subdivisions and have concluded each blog article with how the average home appreciated from 1991 through 2007. The following table summarizes each Tallahassee neighborhood that I have reviewed lately:

As you can see, all of the neighborhoods have performed well. With appreciation rates from 4.5% to 7.5%, the Tallahassee real estate market has done wonderful. Loaded with this information, I would like to demonstrate why home ownership in the Tallahassee real estate market is the single-greatest investment that a family can make. It blows away the stock market, and for most families, it is by far the smartest investment that they can make.

In order to perform this analysis, we will look at a fictitious family, living in a fictitious Tallahassee Subdivision, and will use these assumptions (which are typical of what we see in the Tallahassee real estate market):

Assumptions

• The family bought their home in mid-year 1991 and sold it in mid-year 2007
• The neighborhood in which they purchased experienced a 5% annual appreciation rate
• They purchased a home that was roughly equal to the median home value in 1991 for $90,000
• They financed the home with a FHA loan ($85,500 at 7% for 30 years)
• They could have leased a similar home for $900 per month (increasing 3% per year)
• Home Maintenance & Repairs for the family would be $2,160 the first year and represent 20% of each year’s gross lease

When somebody decides to move to the Tallahassee real estate market, they have two options. They can buy a home in Tallahassee, or lease a home in Tallahassee. We can then analyze the difference between the two actions and determine how smart the decision that was made proved to be. When somebody buys a house in order to make it a home, it is more than an investment. It is a place to live, plus an investment. We can place a fair market value on what the house could be leased for (a place to live) and subtract that from the cost of home ownership (an investment) in order to determine the value of the investment.

The table below shows all of the expenses that would have occurred with this home during the period from 1991 through 2007.

The table below combines all of the costs together under “Ownership” and compares them to the “Rent” that would have been charged on this home. The “Difference” can then be seen as part of the cost (if positive) or benefit (if negative) of home ownership versus leasing. As we can see below, a home in this price range would have been pure benefit.

Finally, to determine the investment benefit, we have to calculate the Internal Rate of Return on the home owner’s investment and compare it with other investments the home owner could have made.

The investment on the home would have been a five percent (5%) down payment (plus three percent in closing costs) which would have been $7,200. Had this money been invested in the stock market, in a fund matching the Dow Jones Industrial Average, it would have seen the following return:

Now we have a baseline for which to make a comparison. The initial investment (down payment plus closing costs = $7,200) could have been invested in the stock market for an after-tax internal rate of return for 10.2%. That is pretty strong. How will it compare with the Tallahassee real estate market?

Not even close! The median valued home in the Tallahassee real estate market would have yielded a comparable 37.5% internal rate of return over the same period. History keeps telling us to own our home.

As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

If you'd like to forward this post to someone you think might be interested, simply click on the "Share This" link and click "E-mail."
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