Florida Keys Market Update

There is a lot of talk lately about the new changes to the National Flood Insurance Program (NFIP).

Local attorney Russell Yagel from Hershoff Lupino & Yagel, L.L.P. has been kind enough to provide this summary:

Summary of rate changes being implemented under the NFIP
Russell Yagel / Hershoff Lupino & Yagel, L.L.P. 

 

Already underway:

• Full-risk rates now are being applied to newly purchased property, to property not previously insured, and to policies that are re-purchased after a lapse.

• Premiums for older (pre-FIRM) non-primary residences in Special Flood Hazard Areas will increase by 25% annually until they reflect the full-risk rate.

Beginning October 2013,

• Premiums for pre-FIRM business properties, severe repetitive loss properties (1–4 residences), and properties on which claims payments exceed fair market value will increase by 25% annually until they reflect the full-risk rate.

• Routine rate revisions will include a 5% assessment to build a catastrophic reserve fund.

Anticipated late in 2014,

• Premiums for properties affected by map changes will increase by 20% each year to reach full-risk rates.

Who won’t be affected:

• Owners of primary residences in SFHAs (Special Flood Hazard Areas) will keep the subsidized rates until the home is sold; the policy is allowed to lapse; a new policy is purchased; or a string of severe losses is experienced.

• Post-FIRM rates for all zone classes will be unaffected by Section 100205 of the Biggert-Waters Act.

Thank you, Russell Yagel for providing this informative summary.


To contact Russell Yagel:
Hershoff Lupino & Yagel, L.L.P.
www.tropicalaw.com
90130 Old Highway
Tavernier, Florida 33070


 

201 Nautilus Drive, Islamorada

Having an offer on a short sale listing accepted immediately after it is listed is no longer an option if it is a property that would require approval by Fannie Mae according to recently announced requirements for Fannie Mae short sales listed in a multiple listing service (MLS). Starting August 1st, each new short sale listing must maintain an “active” status for a minimum of five days; and that time-frame must include at least one weekend. Freddie Mac announced similar guidance for Freddie Mac short sales.

It’s important to remember two things: that the new rule only affects Fannie Mae and Freddie Mac short sales; and, though it directly affects sellers, it also indirectly impacts buyers’ offers.

Fannie Mae wants short sale listings to be marketed in a manner that allows the market to see the listing.  Properties Fannie Mae owns (REO listings) reflects the same philosophy since Fannie Mae won’t evaluate offers until the listing has been in the MLS and “active” for at least three days.

While an offer can be presented at any time after the property is listed, the seller cannot accept any offer until the required five-day marketing period ends. A buyer’s agent could, for example, submit an offer on the first day a home is listed. However, they there should be wording in the contract that gives the seller five days to accept the offer if the property must follow Fannie Mae or Freddie Mac’s rules.

Under Fannie Mae and Freddie Mac’s rules, the short sale property must be listed in an MLS that covers its geographic area where the property is located.  For instance, a property located in the Florida Keys must be listed with the local Florida Keys MLS.  Listing a property in the Florida Keys with the Miami-Dade MLS may not be acceptable, since the Florida Keys is not the primary geographic area for that MLS.

There's been a lot of talk about flood insurance rates here in Monroe County, and for good reason.  On July 6, 2012, the Biggert-Waters Flood Insurance Reform Act of 2012 was signed into law. While the good news is the reauthorizing of the National Flood Insurance Program (NFIP) through September 30, 2017, the bill brings several substantive changes to the program, including several that alter the way premium rates are calculated.  These changes will take effect October 1, 2013.

The two big changes owners of real estate in the Florida Keys need to be aware of are as follows:

1.) Higher premiums for buildings below base flood elevation:  FEMA has been instructed to stop giving premium discounts to properties that are below the BFE (base flood elevation), even if they were up to code when built.

2.) Pre-firm and grandfathered rates phased out: In the past, many structures were allowed to keep their original flood-risk rating, even when conditions and improved understanding had changed.

For instance, a home that was built pre-firm (before 1975) may have been built in accordance with the code at the time it was built, but due to a change in flood maps, it may now be considered below the BFE. This home will no longer be allowed to keep the rate-class (flood zone and building elevation relative to BFE) that applied at the time of construction.  The flood insurance for properties like this will be allowed to increase by 25% per year until they achieve the full premium rate.

If you are considering a purchase in the Florida Keys, you will want to find out what flood zone the property is in and if the home is above or below the BFE.  Ground level homes, particularly older ground level homes, should be researched thoroughly. You need to know the flood zone the property is located in and have an elevation certificate to determine what the elevation of the structure is.   Elevated homes with ground level enclosures should also be researched to determine that the whole building is above BFE.   Once you know what the flood zone and elevation is, contacting an  insurance agent for a detailed quote is essential.

Every so often, you'll hear about buyers that want to buy property "at the courthouse steps" in an auction as part of a foreclosure.  Almost all of the time, the lender gets the property. Why?

More often than not, the minimum bidder the lender will accept is more than what the property is worth.  Just the outstanding mortgage alone is more than what the property is worth. On top of that, take into consideration other costs such as delinquent property taxes, legal fees, etc and the property loses it's "bargain" potential.

For example, there is a property I know of going to auction later this month. The current owner owes twice what the property is worth. No buyer will bid on that property because they can buy a different property for half what the bank will accept. They will also be able to buy a property that they have been able to inspect, tour, visit, etc. prior to making an offer.

Lack of access to the property prior to the auction is something that needs to be taken into consideration.  Chances are there is little or no access to the property before hand, so a property that may look OK from the street may be a disaster inside, which may lead to significant expenses to repair. Also, if the property has tenants in place, it will be you're responsibility - and expense - to evict them.

Most buyers will not pay more than what is owed since it is often more than market value. Buyers at the courthouse steps are typically looking for a bargain. Nearly all properties sold at these auctions are not bargains, so consequently the lender gets the property.

Click on the image to enlarge

As Realtors, there is one question we get asked on an almost daily basis - How is the real estate market doing?

The answer . . . Pretty good!

Here is a comparison of the second quarter of 2013 to the same time period last year.  You can see that the average sales price in every category is climbing upward. Additionally, there have been more closings in nearly each category.  The combination of increased sales and higher average sales prices is a good indication that the market is not only stable, but steadily increasing.

Naturally, the Realtor community is hoping that this trend will continue. Yes, there will always be that handful of sales that come in lower than expected. These sales are usually distressed sales such as bank owned properties or short sales. But overall, the numbers show that the market is improving.

Interest rates are still low, and there are indications that they may rise again soon. Lower interest rates are most likely one of the main reasons we've seen such positive results in the market this year.  It may sound like a cliche, but if you are considering a purchase in the near future, you will want to do it soon while rates are still low and there is still a good inventory to choose from. 

If you'd like to learn more about the real estate market in the Keys, don't hesitate to call or email me using the contact button at the top of this page.

72 Bahama Avenue

Spacious open floor plan

It's always bittersweet when a listing you love sells.  This home was one of those sales. Located in a great Key Largo neighborhood, this home's big feature was the solar panel system that covered the roof of the home.  One of the largest residential solar systems in the Keys, it allowed the owners to leave the AC on to maintain a consistent temperature all day, every day.  It generated almost all of the home's electrical needs during the day. In addition, it had roll down hurricane shutters on every window, a large open floor plan, screened patio, covered parking and a legal, above flood ground level enclosure. It was a great listing and I loved showing it. Listed at $369,000, it sold for $365,500 and was on the market just 7 days when it went under contract.

Learn more about this great home at www.72BahamaAvenue.