Orlando Florida Real Estate Blog

Hey, Hey.... The seasonal shift in the market is here. Yes, The buyers are here ready, willing and able to buy. However, They can't because the banks are holding the houses hostage. Yes, They will not answer and return phone calls and sometimes take up to 6 months to respond to an offer. What? 6 months? Yes, 6 months. Why don't they want to get these homes off their books? They appear to be just waiting for up to 6 months to get a better offer. Someone needs to tell them that that better offer is not coming.

In fact, they are shooting themselves in the foot and they don't realize it. I now am seeing buyers and other agents asking to show my listings and the first question is: Is this a short sale? When I say NO, they are so relieved. Great, we're so tired of waiting for the banks. We don't want to put an offers on bank properties any more.

Therefore, homes are not being sold because of the banks. They are holding the Housing industry Hostage. If there was a quicker response from the banks there would be an uptick in the market and housing would certainly pick-up again. Why can't we get CNN news or any of the major networks, Fox news, CBS, NBC, ABC or whomever to report of what's happening and shake up the banks. Maybe we'd get an answer to submitted offers in a reasonable time. 3-6 months is not reasonable.

About the author:

Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://www.jerrysellsorlando.com/ for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

Jerry LaRose, P.A., ABR, GRI, e-PRO, CLHMS, REALTOR® 407-580-7011

(Copyright © 2008 By Jerry LaRose, P.A. All Rights Reserved.)

Tax Planning Deserves Year-Around Consideration
The reason so many IRS deductions go unclaimed-Realtors and business owners don't know about them. Or they don't know about them early enough in the year to collect necessary information as they go along.

As a person running your own operation, tax consequences need to influence how you conduct business, day in and day out. Where to spend-or not. How to structure transactions. When to act. How much you must pay in income taxes can easily determine whether your operation turns out to be profitable for the whole year. You're entitled to claim every expense and write-off the law allows. That's money in your pocket.

As you read on, take a bow for those you're already doing. And resolve to benefit from others that fit your situation (which now won't pass you by). There's still time to include these tax-saving deductions for your 2007 Federal tax return.

Section 179 Property-Personal Property Write-off
Receive an up-front write-off of up to $125,000 for personal property purchased for use in the business. (This increases to $128,000 in 2008). That covers computers, printers, office furniture, fixtures, etc. It's no longer necessary to depreciate the cost over the asset's useful life, since you can expense the entire purchase price the year the asset is acquired.

Notice that this deduction cannot be used for personal property like appliances and furniture in residential rental property, however. But it would apply for such equipment in commercial rentals.

Travel Expenses
The Internal Revenue Code defines travel expenses as the "ordinary and necessary" expenses incurred while traveling away from home for your business, profession, or job. They include transportation, baggage, lodging, meals, laundry, telephone calls, and tips. Travel expenses do not include expenses for entertainment.

Special Note: Regulations require that business travel expenses be substantiated by evidence like diaries, logs, receipts, paid bills, and expense reports. You must separately report each expense for transportation, lodging, and meals. Indicate the date you left and returned for each trip, and the number of days away spent on business. Note down your destination and the business reason for the trip, or what business benefit you expected to gain.

Entertainment Expenses
The IRS restricts your ability to write off the cost of meals and entertainment. Unlike other expenses, only 50% of what you actually spend can be deducted as business expense. In my experience, Realtors too frequently under-claim entertainment expenses they're entitled to take.

Avoid the risk of scrutiny by keeping certain information for each deduction:

• Date and time
• Place
• Amount claimed
• Relation to the person or event
• Anything else relevant

There are several areas where the 50% reduction does not apply. So break those figures out and write them off 100%.

• Transportation to and from an event
• Open houses for listings
• Events to reward employee performance
• Business gifts or incentives up to $25 per customer or client

Home Office Deduction

You may write off the portion of your home used regularly as the office of your business. Deduct a percentage of the utilities, repairs, maintenance, and depreciation. The tricky part-that area must be use exclusively for business purposes. And you cannot also have another off-site office where you conduct substantial work or administrative tasks of running your business. This topic is so important for Realtors (and widely misunderstood), that I'll devote a future article to this.

Put Family Members on the Payroll

Hire family members to work for the business. Pay them for the work done at the rate you'd pay someone else to do it. Minor children, your spouse, grandma, etc., can help with necessary tasks-answer the phone, cleaning and maintenance, record keeping, distributing flyers, performing computer tasks, etc. Keep detailed records of their tasks and hours. And the person does have to do the work. The numerous advantages of involving family members in the business go way beyond saving taxes. And since they really earned it, the "kiddie tax rules" do not apply.

Get in the Habit of Finding Legitimate Deductions

Taxes won't go away. But by claiming every deduction you're entitled to, you can cut them down to size.

As a Motorcyclist I am or at least try to be aware of my surrounding at all time. Below is a test.

Click to take this test. As good as I think I am I failed the test.

Yes, I failed. Oh No.

How will you do? Take it to see. 

Jerry LaRose, P.A.                 407-580-7011 JerrySellsOrlando.com          Keller Williams Classic Realty        5979 Vineland Rd. Ste. 101 Orlando, Fl. 32819

In the next few months making a move can become increasingly more complicated say industry experts.

"June to September is really known as the high season for the moving industry," says John Bisney, Director of Public Relations for the American Moving and Storage Association (AMSA).

It's a popular time because kids are out of school and people are trying to get the move done before the children have to return to class.

"So if you can avoid moving during June to September you're probably going to get better service and have more options," Bisney.

However, Bisney says, "If you do have to move between June to September, then it's better to move in the middle of the month and the middle of the week as opposed to doing it at the end of the month when everybody wants to do it."

AMSA certifies movers and holds them accountable to higher standards and a code of ethics. The association says most people don't take moving very seriously and they assume that everything will go alright. But Bisney says careful consideration is a must when moving.

"Because people don't move that many times, maybe it's their first move, or maybe it's been a few years since their last move, they will treat it as a less important decision than it needs to be given the fact that [movers] are going to have custody, at least temporarily, of all their belongings," says Bisney.

So, if you're gearing up for the big move, AMSA has some advice to simplify and ensure a smooth process. I spoke with Bisney about the top five consumer moving tips.

The most important thing to do is to start with a good foundation. Just like the purchase or sale of your home should involve experts who have your best interest in mind, hiring movers also requires thorough investigation of all your options.

"It really comes down to do a little bit of your own homework to make sure you're getting the best deal and that you're dealing with the right people," says Bisney.

Start by calling a few service companies. Bisney says consumers should be wary of over-the-phone and Internet estimates. "Get three written in-home estimates and when you do that, make sure you show the mover everything including anything in the attic, the basement, the garage, storage areas, etc. Typically two of the three estimates will be pretty close in price, in weight, and in service," explains Bisney. He adds, "We say to avoid movers who have unusually high or low bids; that might be a red flag."

Another important tip is to be cautious of any carriers or movers that are asking for a big down payment to either hold a date or reserve service. It's not that a down payment is uncommon in the industry rather it is how much money is being requested that could be a warning that something isn't right. "There's nothing wrong with asking for a reasonable small down payment just in case you cancel on them last minute. But it should not be hundreds of dollars," says Bisney.

"The moving business can be a very complex business and it has its own jargon," says Bisney. That's why making sure you ask plenty of questions. Don't leave things to chance. If you feel the moving company isn't being straight-forward with you then consider another option. Get all the details and information up front because you never know when you'll need to reach the company and the driver.

Make sure the movers have your cell number because you might be in transit too. It's good to have the drivers full name, and truck number that way you can call the company if something changes with your plans.

Take your valuables with you. Cash, important papers, jewelry, medications--anything that you really would never want anything to happen to should be taken with you or sent ahead with a traceable service carrier.

Where you are moving to also affects what you need to know. AMSA says if you're moving from one state to another be sure to get and read the required Inter-state shipment booklets/documents. Inter-state shipments are regulated by the Federal Motor Carrier Administration which has more regulations than for an Intra-state move.

Finally, know who you're dealing with and be sure you have investigated the company's reputation. This can be the most challenging thing to do for consumers who are frequently in a hurry and often leave moving details to the last minute.

A good way to find out more about a company is to go through associations such as AMSA. "We set certain standards and by being a member of our association, they have agreed to abide by them," says Bisney. While policing the entire 3,700 members isn't possible, Bisney says the association does its best to keep track of how its members are conducting business.

"We offer a certified moving consultant credential that means that you adhere to certain ethical conduct and that you represent fundamental competency in terms of moving household goods," explains Bisney.

Movers go through an application process, pass a certification exam, sign a code of conduct, pay annual dues to the association, and are required to participate in an annual re-certification process to keep their certification status.

Making a move doesn't have to be a headache if you take some time to plan ahead. So while you're home is sitting on the market, don't fret about when it's going to sell, instead do your due diligence and get ready for the big move.

Even if now doesn't seem to be the ideal time to sell your home, you can take heart in knowing that small actions may make a difference in getting your home sold.

"Scentmosphere" isn't exactly new but it is rapidly becoming a way to attempt to attract buyers.

"When buyers walk into a house before they actually see anything in that house, because they breathe, they are smelling. So they are actually getting an impression, whether it's conscious or subconscious, of your home -- just by the way it smells," says Rick Ruffolo, senior vice president of brand, marketing, and innovation for Yankee Candle Company.

So, right now take a deep breath. What kind of "smellment" is your home making?

Choosing to proactively make a statement in the way your home smells is just another step in helping to sell your home faster. It's the next step after curb appeal. Ruffolo says curb appeal gets buyers in the door but then they see and smell your home and begin to decide if this is the home for them.

"If it's a vacant home it can be musty. But if it's an active home it also could have odors of whatever activities that are going on in that house," says Ruffolo.

Are buyers going to smell the over-sized dog that traipses around the house after rolling in the newly-cut grass? Are they going to smell your son's gym bag filled with dirty socks that has been buried deep in his closet for the last five weeks? While we certainly don't all have the same preferences for scents, most would agree neither of those two things pose a welcoming aroma.

"It's not rocket science, but it is candle science," says Ruffolo.

He suggests candle fragrances such as the smell of freshly-baked cookies. "Not everybody likes to eat cookies but everybody enjoys the smell of cookies, and when I say everybody, there may be the exception here or there, but the vast majority would enjoy the baking smell. So we're always fond of fragrances that are in the vanilla family," says Ruffolo.

Fragrances such as French vanilla, butter cream, and créme brûleé that mimic baking scents are welcoming and inviting for buyers. Scents register in our brain and frequently remind us of our past experiences. Creating pleasant aromas in your newly-listed house can help the buyer to experience an emotional connection with the home.

Ruffolo says when it comes to bathrooms, great rooms, or even basements it's a good idea to try different fragrances.

"You may want to think of what we refer to as clean or fresh fragrances and those could be based in various fruits, so the citrus family is a really good one," says Ruffolo.

He says, however, there are some fragrances that you should avoid as they don't tend to appeal to the masses or they have too strong an odor.

Ruffolo instead encourages sellers to use fragrances that will instantly be winners such as vanilla, kitchen spice fragrances, citrus, and the smell of freshly cleaned laundry.

"Scent impacts the atmosphere," says Ruffolo. He says that candles are the best way to get the fragrant aroma in the air, but if you don't have time to let them burn before showing your home there are other methods that work to get the right "scentmosphere."

The company has electrical plug-in products that have oil them so they provide continuous fragrance. "If you're away from the house for a period of time, you don't have to worry about the candle being lit," says Ruffolo.

Reed diffusers are both decorative and powerful for giving off fragrance. The diffusers contain oil and the reeds help to draw the oil up and out into the room. "They don't fill a large room but they fill a nice small space very well," says Ruffolo.

But if you give every room a fragrance, is there a point of over-saturation? Ruffolo says that's not likely to happen.

"It's not like the person who put on too much perfume. A home is a very large place and it absorbs a lot of the fragrance so it would be pretty hard to overpower a house with too much fragrance," explains Ruffolo.

Ruffolo says with all the tips out there about selling a home, the scent factor is often the most forgotten.

"If you don't have a scent that you want in there, buyers are going to smell whatever is going on in that room. So if it's been closed up or doesn't have a lot of air flow there will be more of a musty, damp, or a less desirable scent," explains Ruffolo.

It just makes sense that if you want to create an appealing environment for buyers, pleasing scents should be part of the selling plan.

Should you buy foreclosed homes?  Good Question.  View this video to give you a bit of a heads up on what to expect.

The Median Sales Price for homes in the Orlando area as we all know has decreased significantly. Everyone is asking, where's the bottom. Well, I'll be the first to say that I see the bottom. I will go on record to say that we're almost there. I pulled this trend chart from Trulia and it represents the median sales price of homes. The most important lines are the black and purple. The black line is actual sales of the median priced home. Notice that this jumped out of proportion Jan.1 2004. If prices had not jumped due to supply and demand and had just progressed normally at a 3-5% increase, that average which is represented by the purple line would be approx. $205,000 today. However, the actual today is at $225,000. Therefore, I see the market still correcting another 10% and possibly more. Nothing says that we can't go below this line. That may be possible for a short period of time to clear out the foreclosures and short sales. So there it is, my crystal ball is telling me that the market in Orlando will continue to decrease another 10% - 15% overall before we stablize.

Forty year mortgages can reduce your monthly mortgage payment, but is that enough to offset the extra cost of tacking 10 more years onto the conventional 30-year mortgage?

The question is probably too simplistic, says Dan Green, a mortgage planning specialist at Mobium Mortgage in Chicago.

He says loan products like the 40-year mortgage are deemed risky because they are viewed in a vacuum, without considering the needs of the individual borrower or without comparing their benefits with other mortgages.

"It's not the loan that is risky, it's the behavior of the person paying the loan," is the advice he offers in his treatise on home loans longer than 30 years.

The draw of a 40-year mortgage is its relatively lower payment -- compared to a 30-year loan -- due to stretching out the amortization schedule over a longer period of time.

That could be attractive to those in high-cost housing areas, those who can't qualify for a 30-year mortgage payment or for those who want to qualify for a larger home. Longer term loans are also beneficial for people who don't plan on moving for a long time.

But here's the rub, not only will you pay more over the life of the loan for a 40-year mortgage, the higher interest rate on a 40-year mortgage bites into some of the expected monthly savings.

According to LendingTree.com the rate on a 40 year mortgage could be 0.25 percent to 0.375 percent higher than the rate on a 30.

So let's do the math on a $250,000 mortgage, at 6 percent for a 30 year mortgage and 6.25 percent for the 40, using Nolo.com's "How much will my fixed rate mortgage payment be?" calculator.

The interest and principal payment on the 30-year loan would be $1,498.88 with a total of $539,593.37 paid over the life of the loan.

For the 40-year mortgage, the payment would be, $1,419.35 with a total of $681,285.85 paid over the life of the loan.

That's less than $100 savings each month in exchange for more than $140,000 in extra cost over the life of the loan.

Also consider the fact that the principal is not paid down on a 40 as fast as it is on a 30, toss in a market with flat or falling home values and homeowners with a 40 year mortgage could really feel a pinch instead of relief.

Or so the theory goes.

"These arguments are all based on a single tenet -- that paying down a principal balance is a good thing. That's not always true," says Green.

Green says the more a homeowner invests in the home, the smaller the return because the cash-in investment isn't generating the return. It's the home's value that grows -- market permitting.

The 40-year mortgage behaves somewhat like a no- or low-down mortgage in terms of using more leverage and leverage is the tool investors use to play the game, for good reason.

You get the same level of market-based equity growth with a 30-year, 40-year or even 15-year mortgage. With a 40-year mortgage it's just that you get that equity growth at a smaller monthly cost. Greater leverage.

Most people move or refinance within five to seven years and the low monthly payment could work from them in the right market. Given home equity growth historically shows up during a 10 year housing cycle, but not for the entire cycle, timing is important.

The 40-year mortgage can be a good fit if for those at an early stage in their career. It can allow them buy a home they might not otherwise be able to afford. Later during the next equity-growth cycle they can sell and buy anew sell or refinance with the next appropriate financing tool.

A 40-year mortgage can also be advantageous for high-income earners whose mortgage interest payments may be their only large income tax deduction. And it can be used by vacation rental owners to reduce carrying costs.

Other mortgages can perform the same high-leverage trick, provided you can qualify for them, provided they are a risk-fit for your financial status and planning and provided the market cooperates.

The key, says Green, is running all the numbers, both the cost-comparisons of mortgages along with your financial goals, planned tenure in the home and lifestyle.

"New loan products like the 40-year mortgage are not dangerous to everyone. They are only dangerous to homeowners who operate without a financial plan," says Green.