Each month, the Orlando Regional Realtor Association publishes its Market Pulse, a report containing essential market data. Here is our breakdown of the June edition:

First, the bad news:

1.) The number of new contracts written in May actually decreased from the number written in April. It’s the first month-to-month decrease since December of last year. Although we are almost out of the traditional “buying season” (March to June), new contracts still should have shown an increase.

2.) The average mortgage rate increased to 5.94%, the highest it’s been since November of last year. The higher the interest rate a lender charges, the less a buyer has to spend on a home.

3.) Overall inventory decreased from 25,436 in April to 25,015 last month, a change of less than 2%. Although the fact that inventory decreased is good news, the glacial pace at which the number declined puts it in the bad news category. At this rate, it will take us two to three years to return to a balanced market.

Now, the good news:

1.) Total sales closed increased from 1,231 in April to 1,276 last month. Although it’s a small change, it indicates buyers are still in the market for homes.

2.) The number of new listings decreased to its lowest level since December 2007. We’d like to see this number decline even further, as only serious sellers should be listing their homes in this market.

3.) The total number of properties under contract increased for the fifth straight month to 3,225. Although many of these under contract properties are short sales and, therefore, a good number of them won’t close, this statistic is another good indication that buyers are out there and ready to purchase.

This is yet another month of mixed news. Overall, we seem to be heading in the right direction. Inventory is down, sales are up. However, the rate of change is glacial, indicating that we are far from out of the woods.

Our recommendations for buyers and sellers have changed slightly.

Potential sellers still need to make a fairly quick decision whether to sell or hold. Although depreciation has slowed, and is likely to continue to slow for the foreseeable future, homes are still losing value. Price is still a major concern for buyers, and the abundance of foreclosures and short sales has put pressure on general re-sales. Hold or lease if you can, plan to present a well-priced, immaculate home if you cannot.

Buyers still need to get out there and buy. Many lenders are now using credit score as the major determinant of interest rate. For example, a buyer with a 650 score might get a 6.5% rate, while a buyer with a 700 credit score might get the same loan for 6.125%. Buyers who wait will likely find themselves paying a higher interest rate. Additionally, the number of foreclosures is reaching a peak, forcing banks to let go of properties for less than market value. As foreclosures begin to decline, banks won’t be as desperate.

As always, we are happy to speak with you about any questions or concerns you might have about today’s market. Simply contact us at 407-222-8257 or contact@cflistings.com.

You’ve probably heard the terms short sale, bank-owned, pre-foreclosure and foreclosure before. It’s hard not to have heard them, given the recent attention they’ve garnered. However, what do they mean? What are the differences between them? Which option might be best for you? Here’s our breakdown of the terms to help you answer these questions and more:

1.) Short Sale a.k.a. Pre-Foreclosure

Definition: Occurs when a homeowner is behind on his payments and owes more than the property is worth. The home is listed for sale until an offer comes in. The bank, after reviewing the owner’s reasons for being delinquent, agrees to take less money than is owed, allowing the owner to sell.

Disadvantages: The major disadvantage is time. Once you submit an offer to the bank, it can take anywhere from 30 days to six months to get an answer. Additionally, other buyers can make offers while yours is under consideration. If they offer more money, you are forced to increase your offer or find another property. Finally, short sales can be in poor condition as sellers no longer have the money nor the motivation to perform routine maintenance and/or repairs.

Advantages: The possibility of getting a property below market value is the major advantage of a short sale. There’s no telling what sales price a bank will ultimately approve, so there is the possibility of getting a great deal. Another advantage is that you, as a buyer, can choose which contract and addenda to use. Unlike in a bank-owned property, you are still executing a contract with an individual seller, so you set the terms you want.

2.) Bank-Owned a.k.a. Foreclosure

Definition: Occurs when a bank actually takes ownership of a property and lists it with a Realtor.

Disadvantages: The major disadvantage of buying a bank-owned property is the “As-Is” provision. Banks sell properties “as-is” and will not make any repairs or warranty the property in any way. Since the previous owners likely left against their will, bank-owned homes are typically not in the best shape. Additionally, banks are very strict with the purchase contract. You must use the bank’s form and accept all of the bank’s terms.

Advantages: Just like with a short sale, there is the possibility of getting a great deal. However, because the bank already owns the property, you do not have to wait to find out if the contract is accepted. In most cases, you submit your offer and hear back from the bank within 48 hours.

The bottom line with both bank-owned properties and short sales is the possibility of buying a home for less than market value. However, both transactions come with increased risk. Either way, it’s best to speak with your Realtor about whether either option might be right for you.

Welcome to our blog series on choosing the right Realtor. Last week, we discussed the initial phone interview. If you missed that blog, click here to get caught up. This week, we’ll be covering the third and final installment in the series, the face-to-face interview.

Ideally, you want to set up in-person interviews with at least three Realtors. These interviews should be conducted at your home and everyone who is involved in the decision making process should be present. The length of these meetings can vary widely depending on the Realtor, but plan to set aside at least an hour and a half.

One quick note about these interviews. You’ll probably hear Realtors refer to them as “listing presentations”. We don’t like this term simply because it implies the Realtor will do most of the talking. In an ideal listing interview, the Realtor will ask you lots of questions and vice versa.

A typical listing interview will start with the Realtor asking you to give him a tour of the house. This presents an opportunity for both you and the Realtor to get to know each other in a casual atmosphere. It also familiarizes the Realtor with the property and allows him to note items that need attention to maximize your selling potential. Be sure to point out any unique features of the home, items that need repair, upgrades you have made, etc. *If the Realtor does not ask to see the home before starting the actual interview, that is a huge red flag.

Once the tour is completed, it’s time to start the listing interview. Since you have already asked about the Realtor’s experience and background during the phone interview, this time should be spent asking the Realtor about his pricing and negotiation strategies, showing policies and procedures, commission rates and transaction fees, and marketing and advertising plans. There are no “right” answers here, so you are really just making sure the Realtor has a solid, workable plan for selling your home.

In addition to the questions you have for the Realtors, the Realtors should have questions for you. Although the exact wording will vary, each Realtor should ask about about your goals for selling, restrictions on showings, frequency and type of Realtor-client communication, and any other special needs you might have. It is vitally important the Realtor ask these questions and you answer them honestly. *If the Realtor does not ask these questions, or does not seem to listen to the answers, it is a major red flag.

At some point during the listing interview, the Realtor will ask for you to sign a listing agreement. Do not sign it! You should not sign anything until you have interviewed all the Realtors on your list and had time to review all the necessary paperwork. There are a couple reasons for that.

One, you want to interview everyone before making a decision. Even if the first Realtor really blows your socks off, resist the temptation to list right then and there. The other Realtors might blow you away even more.

Two, the paperwork to list a home can be somewhat complex and you should make sure you fully understand what you are signing. If you are not comfortable with anything in the listing paperwork, ask the Realtor if it can be modified or removed.

Once you have interviewed all the Realtors on your list and have reviewed all the necessary paperwork, it’s decision time. We have listed a couple of red flags (not asking to tour the home first and not asking questions about your goals and preferences). We would highly recommend you pass on any Realtors that raise these flags. Otherwise, it’s up to you to decide who you feel comfortable with.

Again, there are many different “right” ways to do real estate, so keep an open mind to the methods and practices of the Realtors. As long as they can back them up with a proven-track record of success, you should be in good hands.