Inexperienced buyers and real estate practitioners are given the impression that they can buy homes in foreclosure and turn them around into huge profits. Well, they could not be more wrong. Finding those lucrative opportunities in the REO foreclosure world requires a lot of patience, diligence and homework on the part of the buyer. Buyers need to inspect the homes inside and out because the vast majority of them are being sold as-is.

After proper legal notices, the next step in a foreclosure is typically a courthouse auction. Interested real estate professionals should contact whoever is in charge of the auction and find out what documents a buyer must bring to the proceedings. It’s wise to have on hand an assortment of cashier’s checks in various denominations to cover bid amounts since most foreclosure auctions are cash only. A general rule of thumb is don’t bid if you don’t have the money on you. It is also important to visit local auctions several times before you bid to learn the procedures.

In the recent real estate boom, a lot of home sellers questioned the need for a Realtor in the transaction, thinking a home sale included little more than putting a “For Sale” sign in the front yard and waiting less than three days for an offer. But no more. The level of for-sale-by-owner (FSBO) transactions remains at a record low, according to the NAR’s 2007 Profile of Home Buyers and Sellers released yesterday at the 2007 Realtors Conference & Expo in Las Vegas. Only 12 percent of transactions in 2007 were FSBOs, unchanged from 2006. The level of homes sold without professional representation has declined since 1997 when a record 18 percent of transactions were FSBOs. The survey also found that four out of 10 FSBO properties were never available on the open market, but were “closely held” between parties who knew each other in advance, such as family members or acquaintances.

Source: © 2007 FLORIDA ASSOCIATION OF REALTORS

Last month Acqualina Sunny Isles informed Rosewood Hotels and Resorts of its decision to in their relationship as of the end of October. Acqualina is establishing their own brand call Acqualina Management LLC. The hotel management company that has employed the on-site management team supervised by Rosewood since the opening last year of the 96-rooms and suites at Acqualina Ocean Residences and Resort in Sunny Isles Beach, Florida, is to assume complete supervision of the management team.

Acqualina has received much fanfare since its opening in May 2006 from such big names as the Robb Roport, Conde Nast Traveler and Travel and Leisure Magazine. Located at 17875 Collins Avenue in Sunny Isles Beach, Florida, Acqualina is an oceanfront masterpiece. Graced with panoramic vistas of the sea and Miami’s glittering skyline, the resort features a 96-room ultra-luxury boutique resort and 189 lavish condominiums. Guests of Acqualina enjoy world-class services and amenities including the #1 Zagat rated Il Mulino New York restaurant, a 20,000 square foot oceanfront spa run by ESPA (the leading European spa operators), three swimming pools, tropical garden areas and a private beach club. For more information on purchasing a condo hotel or condo unit at Acqualina please call Paul Hansen 786-586-4778.

Sounds kind of strange doesn’t it? But if you really think about it the impact of high oil prices when it comes to heating a home in the dead of winter in the northern states, then maybe its not so strange. Heating oils are projected to rise in cost this winter in the neighborhood of 25 percent. If this turns out to be a cold winter for our neighbors to the north and they have huge heating costs, then they may rethink where they want to live. High heating costs will drive up the prices of just about everything in a cold winter.
The so called weather experts are predicting a mild winter, but they also though Florida would fall victim to a record number of hurricanes over the last two years. We all know how that worked out. Hopefully oil prices will fall and we won’t have to worry about this scenario, but if they don’t look out for a new type of buyer in the South Florida real estate market.

The city of Aventura has its newest mixed use project called City Park Aventura. Born from a dream and vision, Aventura-based Sky Development, Inc. is led by Yizhak Toledano, owner, manager and CEO. The firm currently engages in acquisition, conversion, development and rehabilitation of real estate and has a portfolio of residential, hotel, office, retail, mixed-use urban complexes and a multinational industrial distribution facility. Sky Development’s continued goal is to capitalize on the current market conditions while adhering to the business practices of honesty, integrity and full disclosure.

Drawing a direct analogy to the concept of the whole being greater than the sum of its parts, City Park Aventura’s four distinct components on a 7.5 acre master planned community—residential, office, hotel, and retail—form a collaboration that creates the ultimate “Main Street” neighborhood environment. The City Park residential community is comprised of 53 town homes and 51 two-story condos, neighboring a beautiful retail boulevard, flagship hotel with signature ground floor retail, and a class “A” office building. All this, surrounded by lush landscaping and tropical foliage creates a truly distinctive place to call “home”.

For office tenants seeking the ultimate in lasting impressions, few South Florida locations
offer the prestige of an Aventura address, and within this great city, even fewer office
buildings offer the ambiance, amenities and cache of City Park Aventura. Comprising of
150,000 square feet of Class “A” office space, City Park’s office building is surrounded
by 50,000 square feet of retail space offering multiple dining options, a full-service bank
branch with drive through, a flagship hotel, as well as 104 luxury residential townhomes,
two-story condominiums, and private penthouses centrally serviced by a covered parking
garage in its core. From the exquisite level of finishes to the latest technology systems in
place, it is here that sophistication and urban ambiance converge.

Residents of City Park Aventura enjoy the unique privilege of having a seemingly never-ending variety of things to do within steps of their home. From gourmet coffee shops to shops offering the latest in chic wear. From organic foods at the local gourmet market to an outdoor cafe offering casual lunches with friends. From fine dining to a trendy bar for sour apple martinis with your love interest. It’s all there in your own personal “city within a city”. Please call today for more information regarding Aventura’s newest condo and mixed use project, City Park Aventura. Paul Hansen 786-586-4778.

Mortgage applications were up in response to the lowest 30-year mortgage rates since early May, according the Mortgage Bankers Association’s weekly mortgage applications survey, released Wednesday.
The mortgage applications index rose by a seasonally adjusted 3.8 percent to 681.7 for the week ending Oct. 26.
On an unadjusted basis, the index increased 3.6 percent compared with the previous week and was up 19.5 percent compared with the same week one year earlier.
The refinance index jumped 9.2 percent to a seasonally adjusted 2,249 last week, rising to 49.6 percent of total mortgage activity.

Mortgage rates were down in all categories:

· 30-year fixed-rate mortgages decreased to 6.15 percent from 6.21 percent.

· 1-year ARMs decreased to 5.93 from 6.1 percent.

Source: Realtor Magazine Online

The Federal Reserve cut the key interest rate yesterday by a quarter point, this is the second reduction so far this year. The central bank lowered the key rate to 4.5 percent in an effort to stimulate economic activity and keep the country from slipping into a recession. The rate cut came at the same time the government announced that the US economy grew at a better than expected 3.9 percent rate in the July September quarter. Even though economists expect that number to slip for the next quarter, it is still good news for the overall economy of the United States.
Even though the key rate is not tied into mortgage rates, they have dropped to their lowest level in a few months. The lower rates across the board should help to get buyers off the sidelines and into the game of buying real estate.

Now it’s the voters turn to pass the property tax reform. The Florida Legislature passed a new property tax reform and a proposed amendment that will appear on the January ballot. The amendment offers some relief for owners of residential and commercial property, but does not go as far the earlier proposal. This proposal must receive 60 percent of the votes on January 29, 2008 in order to become law. Here are some of the highlights:

• Double the homestead exemption, but only for homes valued at more than $75,000 and not for school taxes

• Allow businesses to exempt $25,000 in taxes paid on computers, office equipment and other personal property

With the deadline at hand, lawmakers had to quickly agree, and the final package represents a product that everyone could accept. The House, however, emphasized repeatedly that it would continue to work on property tax reform during the Legislature’s regular session next year, an opinion echoed by FAR.

While in favor of portability, FAR worries about including a portability provision without also adding some kind of relief for first-time homebuyers, a move promoted heavily but one that did not make it into the final version. Without any kind of first-time homebuyer protection, the U.S. constitution’s “right to travel” provision could be the basis of a court challenge.

Please read this interview with Lawrence Yun and Realtor Magazine. It is very interesting and helps explain the situation of the real estate market.

Economy in Focus

BY ROBERT FREEDMAN

Beneath Market Punditry, Underlying Strength

With some 5 percent of subprime mortgage borrowers facing trouble and global investors wondering if prime mortgages remain a smart investment, these are indeed challenging times for real estate.

In one of the most unsettling headlines of all, Robert Shiller of Yale University and one of the developers of the widely tracked S&P Case-Shiller Home Price Indices, has said mortgage troubles are only beginning and that some home prices could fall 50 percent in the next few years.

Dire predictions like that do more than grab the attention of the media; they can shake consumer confidence and help make such predictions self-fulfilling as home buyers stay on the sidelines, pressuring sellers to lower prices—in effect fueling a downward spiral.

But the prognosis is considerably different than the scare scenario forecasters would have us believe, says Lawrence Yun, NAR vice president of research. In this interview with REALTOR® Magazine, Yun puts the state of the economy into perspective, explaining just how contained the subprime problem is and why the trend lines are already contradicting many of the predictions of woe.

REALTOR® Magazine: No doubt the general media tend to play up negative market news like continuing soft home sales. Is there truth in these market concerns?

Yun: It’s all a matter of perspective. Home sales do continue to be soft. We’re predicting existing-home sales to be down 7 percent year-over-year at the end of 2007, but that’s coming off a five-year boom. We’re forecasting a sales level near what we had in 2002, a very good year, and a level that’s far closer to normal than what we’ve been seeing over the past four years.

At the same time, price appreciation is holding up better than media reports would have us believe. In data we collected this fall, two-thirds of markets reported positive price growth in the third quarter, up from half of all markets in the second quarter. In markets where prices continue to be down, the declines are minimal, 1 percent to 2 percent. Only a very few markets are seeing declines higher than 5 percent.

RM: Why the dramatically different picture than what some analysts are seeing?

Yun: In some ways we’re tracking different things. We use MLS data, so our figures are as timely as possible and are more representative of markets. Shiller uses county records and mortgage data from the secondary market. These sources lag further than ours and they capture a disproportionate percentage of higher-priced homes.

RM: Aren’t we facing a wave of defaults on option ARMs and other mortgages made in 2005 and 2006 with teaser rates about to reset to levels borrowers can’t afford? These defaults will lead to more build-up in home-sale inventories, putting more downward pressure on prices.

Yun: Even with the Fed’s rate cut in mid-September, foreclosures will rise in 2008. But these reset problems remain largely confined to subprime borrowers, who comprise only 9 percent of the market. Subprime borrowers with a mortgage in foreclosure account for only 5 percent of that. So the problem is confined to less than 1 percent of borrowers. We’re expecting foreclosures to add some 200,000 homes to inventories. But when you add that to the 4 million homes already available for sale, you’re talking about a relatively modest percentage increase.

RM: Yet it’s an increase that comes during very challenging market conditions.

Yun: What’s challenging isn’t so much market conditions but the psychology behind those conditions. There continues to be huge pent-up demand, and that demand will grow. Our economy added 4.3 million net new jobs in the past two years.

For every two new jobs that are created we historically see one new home buyer. Right now we’re not seeing those new home buyers because they’re sitting on the fence. Once they look past the headlines, they’ll see that this is actually a very good time to buy: Inventories are flush, so there are lots of homes to choose from; prices are moderating; and interest rates remain historically low. Once the psychology catches up to our real market conditions, that pent-up demand will be released.

RM:You’re talking about consumer psychology, but what about investor psychology? We experienced a very real liquidity crunch in mortgage markets this summer because investors were skittish about holding any kind of mortgage-backed security. That crunch affected prime mortgages as much as subprime mortgages.

Yun: We did see a liquidity squeeze, and some home buyers lost their loans before they could close. But the Fed stepped in with a timely cut to its discount rate and there’s plenty of funding today. If you’re a good risk, credit will be there. Spreads between conforming and jumbo loans remain a little wide — up from about 20 basis points last year to about 1 percentage point today — but I expect the spread between conforming loans and jumbo loans to narrow in a few months.

RM: So the subprime conflagration isn’t showing signs of spreading?

Yun: Lenders are quickly educating themselves about where the risks are. Not all borrowers pose the same risk, and lenders are starting to price accordingly.

RM: But what about all those subprime borrowers? Many of these are the first-time borrowers who helped fuel the growth we saw in home sales over the last few years. What are the options for them?

Yun: We certainly won’t see the number of subprime borrowers that we saw during the boom. But borrowers who can’t qualify for prime loans will still have options, particularly if we see enactment of reforms to the FHA that NAR has been championing. The FHA has historically been the safe and affordable financing option for these borrowers. Largely because it comes with a lot of red tape and lacks a big choice in products, lenders rushed to fill the void with their much-riskier subprime loans. So a reformed FHA can go a long way to returning moderate-income and first-time borrowers to the market.

Some additional flexibility to secondary mortgage market companies Fannie Mae and Freddie Mac, which NAR supports, will help too, because they’ll be able to reach more moderate-income buyers. Mortgages with private mortgage insurance will also make a comeback for buyers with inadequate down payments.

RM: So, where will the home-sale market be in 2008?

Yun: Nationally, we’re forecasting existing-home sales to make a comeback and rise to 6.1 million or 6.2 million units, up from about 6 million in 2006, and prices will also rise about 2 percent. Some local markets like Austin and Denver will do far better. On prices, we’ll be helped by a significant drop in new-home starts. Media reports tend to portray that as a negative—further evidence of troubles. But it’s actually very good for real estate, because it keeps inventories down and price pressure up—and that’s what consumers really care about. The important economic trend lines for consumers are pointing in the right direction.

If you listen to media reports, you might think foreclosures are on the rise in every corner of the country. But despite turmoil in the subprime market, foreclosures are actually down or unchanged in 16 percent of the states.