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Buy a retirement home with no monthly payments

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I have to go to real estate classes to get points for my license renewal. A few weeks ago I had a free day and went to a class about how to buy a retirement home using a reverse mortgage. It was more interesting than I expected.

There is an FHA program called a Home Equity Conversion Mortgage for Purchase. With a large down payment, usually around 50%, you can buy a house with no monthly payments as long as you live in the home. There is of course a monthly charge that gradually eats up the 50% or so equity you have in your house but at the same time the house should be appreciating in value to offset that to some degree.

Why would anyone do this ? A lot of people don’t want a mortgage payment for cash flow reasons on a fixed income. Others don’t want all their cash tied up in a house but don’t want mortgage payments either. Some buyers may have a sizable amount of money from the sale of another home say $100K. However a $100K home usually needs a fair amount of work. Using a HECM the buyer could buy a much newer totally move in ready home in the $175-$200K range with no monthly payments.

What are the negatives ? You gradually lose equity in the home. The closing costs are higher than a traditional loan. The interest rate is higher too.

This isn’t for everyone. Consult your financial planner.

Who says Ocala ain’t got no Arts and Culture

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I sometimes get people asking me about arts, culture, music, adult learning and movies in the Ocala Marion county area so I’m posting a few links to sites of interest.

Posted in no particular order.

Circle Square Cultural Center

Feel Downtown Ocala

Ocala Symphony Orchestra

Marion Chamber Music Society

Reilly Arts Center

Fine Arts for Ocala

Regal Cinema Imax

Marion Theatre

Ocala Drive In

Appleton Museum

Master the Possibilities

The Orange Blossom Opry

 

Ocala 55+ homes with a view

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view looking down Oak Run golf course

All 55+ homes in the Ocala area are on small lots and the homes are close together side by side. Builders do this because retired people don’t want to maintain a big yard and so they can fit as many homes on an acre of land as possible in order to pay for things like clubhouses pools and a golf course.

A lot of buyers can accept a small lot if there is a view or some privacy directly in back that they see while sitting on their Lanai. There are 3 options.

A water view. This would be a very hard to find view of a pond on a golf course. There are no 55+ communities in Marion County on a lake.

A golf course view. There are quite a few homes with a view of the golf course. Builders sell these lots at a premium when new and build communities to maximize golf course lots.

A view of a wooded area. These homes would usually be on the perimeter of the community. An exception is Oak Run which unlike other 55+ was not built with parallel streets. The streets are more laid out in circles allowing more privacy.

Some times you might find some sort of hedge or planting and there are huge open drainage areas that have privacy but are not a real view in my opinion.

Other than golf course frontage I can not search on private back yards. The only way to determine this is by pictures on the MLS and the map feature which often has a birdseye view of the listing

New home prices in Ocala Florida

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Below is an article I saw in the Florida Realtors newsletter that I get every day. It talks about new home prices and how builders can’t afford to build lower priced homes. I think this is something buyers don’t understand. This is especially important to understanding new and newer home prices in Ocala. When the real estate market crashed in 2007 home prices fell too low for builders to build new homes. No one started a major new subdivision until just last year. Many resales were selling for $70 to $90 sqft of living area when new home builders need $110 to $130 sqft minimum to make money. This shows that prices don’t just go down for new homes builders stop building. There still are lower priced homes here but they are from the 80’s to the early 2000’s. Newer homes, 2004+, are at a premium as so few new homes were built during the Great Recession. That is not to say newer home prices here in Ocala are high. In fact they are quite low compared to some other parts of the country.

Lower-priced homes ? Builders can’t do it

CHICAGO – June 13, 2016 – Builders find it increasingly difficult to build a home for under $150,000, despite rising consumer demand for more affordable home options.

The median sales price of a new single-family home in 2015 was just under $300,000, according to the National Association of Home Builders; and about 78 percent of new homes were priced between $150,000 and $500,000. Less than 6 percent were priced under $150,000, and an even smaller share was priced under $100,000.

Yet, a 2015 Home Buyer Preference Survey conducted by NAHB shows that 31 percent of recent or prospective home shoppers say they expect to pay less than $150,000 for a home. Fifteen percent expect to pay under $100,000.

“The costs of acquiring land, developing it into a lot and constructing a home on it often make it impossible to produce a new home at a price substantially below $150,000,” NAHB notes on its blog, Eye on Housing.

Government regulation on a new home alone accounts for 24.3 percent of the price of the home – or about $84,000 based on the average new-home price.

“Cost factors like these leave little mystery about why the lower 30 percent of the home buying public is often restricted to the market for existing homes,” NAHB notes.

Source: “New House Price Data Shows Why Costs Are a Problem,” National Association of Home Builders’ Eye on Housing blog (June 6, 2016)

© Copyright 2016 INFORMATION, INC. Bethesda, MD (301) 215-4688

New Testimonials Page

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I recently updated my web site and blog to work better on phones and tablets. That is something Google is pushing and should help with my search ranking. Any way during the process I added a page where buyers can write testimonials. I expected maybe buyers might write a short note saying they were happy with me. To my surprise most people wrote an almost short story about their experience buying a home with me here in Ocala.

http://www.ocalahousehunter.com/real-estate/testimonials/

Homeowners Insurance and Roof Age

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In Florida our very hot summers along with strong thunderstorms limit the useful life of a roof. Most insurance companies have a 20 year cut off point with some going as low as 15 years where they will not insure a home. This is true for even architectural shingle roofs with a 30 year warranty. My home is a 1998 with a 30 year architectural shingle roof and when I decided to look for a different company that my present one I discovered that many Florida insurance companies were not interested in my business. I did find a new company but my choices were more limited than I expected.

Roof age is a consideration in buying a resale home. The seller is not expected to replace a roof just because it is old. The age of a home is already factored into the list price. If a home inspector says the roof is at the end of it’s life but does not leak then that is not a defect under the florida real estate contract. Many homes between 1995 and 1999 are either due for a new roof or getting close. When showing homes I always point out the age of the home as shown on the MLS printout to make my buyers aware of the home’s age.

Why you need a Realtor to help with new home sales

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The new home market is just beginning to pick up here in Ocala. When the market crashed in 2007 prices for resales fell so far below the cost to build new homes most building came to a stop. Only now, 8 years later, are builders having the confidence to start building again.

The reasons to have a Realtor work with you on a new home sale are many.

1) You want to see newer resales as well as new homes. Many newer resales still offer better prices or more upgrades or a premium lot. Many new home buyers want to see resales to be sure that they aren’t over paying for their new home.

2) You realize that the new home sales people are employees of the builder. A Realtor especially one that specializes in buyers has no allegiance to anyone but the buyer and will show you multiple communities telling you the pluses and negatives of each.

3) You want to see comparable sales before making an offer on your new home. Builders sales people won’t help you here. They would also like to pretend that resales in their same community don’t count.

4) You don’t feel comfortable negotiating. A Realtor negotiates for a living. Although builders don’t like to drop the price because it creates a low comp on their new home sales they do negotiate upgrades.

WARNING: builders are notorious for harvesting your contact info. If you call them, email them, request a brochure, you are added to their data base. Forever! That means they will not want to pay a Realtor a commission. Among ourselves, Realtors think who ever writes the offer gets the commission even if you talked to the listing agent previously. Builders operate by a different set of rules.

 

How to move long distance …..step one pick a city

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The first step in moving long distance is to pick a city. It doesn’t matter what the houses are like if you don’t like the area or the area doesn’t have the things that are important to you. Everyone is different. What is important to me might not even be on the radar for you.

I just spent time with a guy who decided not to buy in Ocala. His reason was that he only ate organic food and there wasn’t enough in the way of organic markets here. A quick internet search or asking me could have saved us both a lot of time.

After a thorough internet search and maybe exchanging emails with someone local like a realtor such as myself you should visit the city. Don’t bother looking at homes just spend a day or 2 traveling around the area. You could hit a few cities in a week or so. Buying a home is a huge investment. You should expect to do a lot of home work. The internet is just a start. There is no substitute for real life in person interaction.

Not all Ocala 55+ have a true HOA

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Not all Ocala 55+ communities have what buyers from other parts of the country think of as a homeowner’s association, that being when the builder finishes construction that he turns over the facilities and management to the residents.

Here and in many parts of Florida the developer retains ownership of the common areas including the clubhouse, pool, fitness center and golf course and manages the community collecting fees for using the amenities. In this type of community the HOA is for social purposes like clubs and activities. Area communities with this sort or structure include Cherry Wood, Oak Run, Ocala Palms, On Top of the World and the Indigo East and Candler Hills areas.

Communities where the residents do control a homeowners association are Summerglen, Spruce Creek Golf and Country Club, Spruce Creek Preserve, Palm Cay, Spruce Creek North,  and Stone Creek when it gets built out.

I’m not sure one is better than another. Oak Run is one of my favorite communities. You get a lot of bang for your fees at Oak Run and the fees pretty much remain the same.

Real Estate from the Seller’s Point of View

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I occasionally take listings but the majority of my real estate work is in representing buyers. When working with buyers a lot are sellers at the same time usually in some other part of the country. In the Ocala area buyers often will make an offer contingent on the successful sale of their existing home which would have to be already under contract. Looking at buyers contracts I’m struck by several things.

1. People will accept offers with really low escrow or good faith deposits. There are plenty of people who can afford to walk away from a $1,000-  if they really want to but not many will walk away from $5,000-. Having said that I often write offers with a low escrow deposit and I’m surprised how seldom the seller counters.

2. Don’t seller’s look at their buyers ability to buy their home ? If a buyer makes you an offer with no money down and wants you to pay closing costs isn’t that a weak offer ? As opposed to cash for 30% down for example.

3. Pre approved. You know that doesn’t mean the buyer is 100%  guaranteed to get a loan right ? In some cases this just means a lender asks some questions about their finances. A seller might want to ask if the lender looked at bank statements, tax returns ect. It is the underwriters who approve loans not the banker or mortgage person who initially interviews the buyer. Underwriters are extremely tough these days and do not rubber stamp loans !

4. Some lenders are notorious for not closing on time. This can be a big problem if you are trying to sell one house and buy another at the same time.

These are just a few thoughts about selling your house. They are all things an experienced Realtor should be bringing up before you get an offer.