Tuesday, April 8, 2014

Flood Insurance and Its Impact on Property Values

The Biggert-Waters Act that, when implemented, will redraw the flood plain maps nation-wide and allow insurers to recoup losses suffered from major storms such as Hurricane Sandy, has been modified.  President Obama has signed the HFIA A14 (Homeowner Flood Insurance Affordability Act, Article 14), which puts off some of the major impactful aspects for 4 years, requires a reexamination of the flood maps and contains the following highlights:
  1. The sale of a property is not a trigger.
  2. Annual premium increases will be limited to a minimum 5% increase and a maximum 18% increase on renewals.
  3. Establishes a surcharge for existing policies.
  4.  Maintains the Grandfathering rules currently in effect.
  5.  Maintains the 25% premium increases for non-primary, business properties and severe repetitive loss properties.

What does this mean for you if you have a property in a flood zone?  Increased premiums.  Maybe not substantially, at first, but there is one other consideration that will realize a major impact - property value. 

Property value is comprised of a number of aspects - you’ve heard the term “location, location, location”.  But other factors such as condition also impact value.  In the past, having a beachfront property meant a higher price tag and you (the Buyer) expected to have higher expenses, such as real estate taxes, etc.  Enter the new flood insurance.  If your annual premium, in just the first year, is $50,000 for $250,000 of insurance (the maximum amount you can procure from the government - the rest must be purchased from private insurers), will this impact your decision to buy?  Will it impact how much you are willing to pay for this property?  Yes. 

If over the course of your ownership the premium cost to you will increase between 5 - 25% per year, this impacts the value of the house and what anyone would be willing to pay for it.  If its not your primary residence, its 25% increase every year!  And, remember, insurance policies are based on replacement cost - not what you paid - not what the assessors think its worth, but what it will cost to replace the structure. 

Here on Martha’s Vineyard, the cost per foot for new construction can vary widely, so your premium will also vary depending on that factor alone.  If you pay cash for your home, or have no mortgage, you do not have to purchase flood insurance.  Just remember that FEMA is not going to bail you out (literally) should a major event occur. 

Expect to see waterfront/flood zone properties decrease in value.  The municipalities where these properties stand will see their tax revenues decline as property owners file for abatements based on their inability to sell or because they purchased a property at a price far below the assessed value.  Almost a tsunami.

Wednesday, February 19, 2014

Home Sales Up in 3 of 4 Regions

2-19 NAR Map

Some industry gurus are questioning whether the housing momentum we saw early in 2013 began to dissipate later in the year. The more dramatic have claimed the housing sector is still on shaky ground. Others have blamed the slowdown in sales on a lack of consumer confidence or rising interest rates.
The National Association of Realtors (NAR) just released their 2013 4th Quarter Housing Report. The report revealed that home sales numbers barely outperformed (an .08% increase) those in the 4th quarter of 2012.
We believe the leveling in home sales is directly attributable to a lack of salable listing inventory; specifically in the West.
Three of the four regions in the NAR report had an increase in sales: Northeast (+7.1%), Midwest (+2%) and South Regions (+3.6%). A big fall-off in sales occurred in the Western Region. The dramatic fall-off in the West (-8.1%) can be directly linked to a shortage of inventory in their hottest markets.
If the decrease in sales was caused by an eroding of consumer confidence and/or rising interest rates, we believe each region would have seen similar decreases.

Here on the Vineyard we are also experiencing a lack of inventory in most price ranges.  This may be relieved as the weather improves (please - let the weather improve!).  What homes are for sale are being looked at, even though its February.  Perhaps the buying public is tired of waiting - even for their second home, which is our primary market.

Sunday, January 26, 2014

Proposed Revised Flood Plain Maps for Martha's Vineyard

I've just attended a seminar on new flood maps and how they will impact homeowners' insurance on Martha's Vineyard.  The new maps increase the area of potential impact and future real estate sales.  If a home is located within one of the zones and the buyer obtains a mortgage to purchase the property, the lending institution will require a certificate of elevation.  A licensed land surveyor and several other professionals are licensed to do these at varying costs, depending where GIS sites are located, etc.  This will create an added cost to the buyer/seller (not clear who should bear this cost yet).  This certificate can delay the closing process by weeks. The insurance premiums will continue to increase over the years - as approved by the government, which guarantees the first $250K in these policies.  The government (FEMA) and the insurance companies have depleted their reserves with the Hurricane Katrina and Sandy cleanups/payouts.  So, the government has agreed that they can: increase the flood plains and insurance rates.  
If there is no mortgage on the property, there is no requirement (as of today) for that homeowner to purchase flood insurance.  However, if you currently have flood insurance on your property, expect the rates to increase, perhaps substantially.
The new maps are still a year or so away from being finalized as each municipality has the right to review and revise, plus there is an appeal period.  For more information, please contact your insurance company.  They will be able to definitively identify how this
may impact you and your home.  

Do You Toss Those Bank Statement Inserts?

I usually do, but this time I decided to read it.  And I decided that it contained some useful information worth sharing.

First I learned that my bank account/checks are protected by something called EZShield!  Didn't know that and there's more.

Did you know?  More than 1.2 million fraudulent checks are written each day - more than 13 per second?!  (Office of the Comptroller of the Currency).  Scary!

So here are some helpful tips on protecting your money and your identity.

1. Monitor your accounts and monthly statements to ensure their accuracy.  Surprisingly, many people don't bother to balance their personal checkbooks!  I guess I'm weird that way.  Plus I look at my credit card statements carefully!

2. Each year, order copies of your credit report from each of the three major credit bureaus to verify their accuracy.  This one bit me a few years ago.  One of the credit bureaus combined my credit with the credit of someone whose name was similar (her credit wasn't as good).  Could have been a catastrophe for me as I was in the middle of buying a house, but I did get it worked out.

3. Thoroughly shred documents containing any personal information before disposing.  Think about what is on your bank statement - photocopies of your signature!  Never mind the account number, where you spend money, etc.

4. Never write your Personal Identification Number of your ATM/Debit card.  And never write your Social Security Number or credit card number on a check.  We live in a password-protected society and it's hard to remember all the user names and passwords, but this advice is critical, and I would add that you shouldn't sign up for more credit cards or add PINs to existing cards if you don't need them!

5. Remove passwords, PINs and identification cards containing your Social Security Number from your purse or wallet.  I'm removing mine today!  Yikes!

6. Never put outgoing mail that may contain checks or tax documents in your mailbox at home.  They know where you live!

7. At home, keep a checklist of the critical items stored in your wallet, purse, laptop and/or PDA.  I can tell you that I was scared breathless when I left my laptop at the airport!  (I was one of the lucky ones and did get it back - intact).

8.  Only order from internet sites that use secure methods of obtaining personal account or credit card information.  Duh!

9. Always log off after an online banking session.  No need to elaborate on this tip!

If you suspect your identity has been stolen/compromised:

1. Immediately file a report with your local police.
2. Call the Federal Trade Commission at 1-877-ID-THEFT.
3. Contact the three major credit bureaus to place a fraud alert on your record.
4. Maintain a record of each contact with authorities.

So, that's most of what was on that little piece of paper that was in with my bank statement.  My thanks!

Friday, January 24, 2014

Your Home Maintenance Checklist!

  • Is Your Home Older Than Its Years?

    Would you throw away $20,000? You are if you’re letting your home age faster than it should. Here’s a simple maintenance strategy to keep your home young. Read

Visit houselogic.com for more articles like this.


Thursday, January 9, 2014

Susan Cahoon, Principal and Broker of Homes on Martha’s Vineyard, was recently awarded the National Association of Realtors’ SRES designation.  SRES, which stands for Seniors Real Estate Specialist, is earned when a Realtor completes a training course and passes an examination.  SRES professionals are well-versed in the needs of our growing and aging population, from the “GI Generation” to the “Millennials”.  “Senior” now encompasses anyone over the age of 50!  “Our needs are often complex, and must address a range of services, while still considering the must-haves of younger family members”, said Susan. “That’s why getting this additional training and knowledge was so important to me.”  An SRES Realtor has access through a wide network of professionals who provide specialized from reverse mortgages to identifying appropriate adult or assisted-living communities. 
Susan has been a real estate professional since 1975, working in management, sales, property management and development in both residential and commercial real estate in the Suburban Boston and Cape Cod and Islands market.  She and her business partner, Tjark Aldeborgh, opened Homes on Martha’s Vineyard in 2011 at Post Office Square in Edgartown.  Homes on Martha’s Vineyard offers a full range of real estate services – sales, rentals and property management.  A full-time, year round business, their real estate agents are committed and caring; making sure that their customers are treated with unequaled service and professionalism.  Susan can be reached at 508-939-0206 or at Susan@HomesonMVY.com.

Monday, December 16, 2013

4 Pitfalls to Selling Your Home for the Best Price in the Shortest Amount of Time

You've decided to sell your home. Great! Now what? Many folks who make the decision to sell their home fall victim to the following four pitfalls. By educating yourself about some common missteps you can save yourself from making a costly mistake when hiring an agent and listing your home.
1) Overpricing - It's no surprise that every owner wants the highest possible sale price for their property. This desire is one that some agents take advantage of by selling you on an unrealistically high list price. Once they have a signed listing agreement they'll bank on price reductions to sell your home. The problem with this tactic is that it costs homeowners thousands of dollars. A property that is originally listed too high not only squanders its first few weeks on market but also carries a stigma throughout its life on-market due to the unrealistic original list price. All this results in lower demand down the road and a lower sale price. It's important to remember when interviewing agents that the highest suggested price is not always the best. Make sure to ask your agent for specifics on how they arrived at their price suggestion.
Experience shows that the highest price is realized within the first 30 days of being offered for sale on the open market.
2) Not Managing Expectations - Real estate is very much a perception based industry. Buyers want to feel like they are receiving good value. Many times agents try to stretch the truth by counting a glorified hallway as an extra bedroom, only to have potential buyers disheartened when actually viewing the home. One of the jobs of a good agent is to accentuate the home's positives and frame things in a way that adds perceived value to a home. Rather than listing a home with an extra bedroom, listing it with a utility room can turn a disappointed buyer into an excited one as they discover a useful extra space. Many times in our industry perception is reality and buyers who leave a property feeling great about all the "additional" value a home offered will be far more likely to put in an offer than those who left disappointed about the tiny bedroom.

As a Realtor, we have an obligation to relay the information about a house honestly.  Further, we also request the seller fill out a “Seller’s Statement of Condition”.  We follow up by verifying information with the appropriate local authorities to clarify such potential questions such as zoning, side-line setbacks, etc.  This helps to avoid surprises that could impact the transaction.
3) Not Making the Best First Impression - You know the old saying a picture is worth 1,000 words? Well in real estate they are probably worth 100,000. Too many times sellers allow their agents to take photos with a cell phone or take photos themselves. Today's buyers are making snap decisions viewing homes online and are basing these judgements off your photos. Hence they need to be high definition, clear, and purposeful. You are telling a story with your media plan and want to entice buyers to see your home in person. The single best way to turn off potential buyers is with poorly lit, poorly edited, and poorly executed photos. Additionally, video is becoming huge in real estate as even more of the house hunting process is taking place online. Ask your agent about adding HD Video to your listing to further entice interested buyers to your property.
As your Realtor, I will be at all showings early, in order to turn on the lights, de-clutter, put the dog out, etc.  When we list your home, we’ll offer suggestions on how best to present your home to prospective buyers.  Some can overlook your personal “stuff”, and some can’t.  Don’t take the chance!  Put your best look forward!  Studies have shown that landscaping can increase the amount realized by as much as 5%!
4) Not having a Customized Marketing Plan - Our last pitfall is one that many sellers fall into. Many agents you will interview will not have a specific plan to market your home. They will instead rely on scripts and a standard listing presentation to get you to sign on the dotted line. After that they'll simply list your home on MLS and hope buyers find it. Marketing for homes cannot be one-size-fits-all. Every home has a distinct set of buyers that will be interested in it and every set of buyers has a distinct way to be reached. Ask your agent who your home will appeal to and how they plan to proactively market to them. If their plan relies heavily around submitting your listing to hundreds of sites you've never heard of you may want to stay away.

We do have a marketing plan with aspects that some agencies do and some that most agencies do not.  Our agent will go over it with you and tailor it to your needs and concerns.  The best current information indicates that the internet is the number one method of attracting buyers; signs continue to be number 2!