The Bosshardt Blog

In spite of area real estate market reaching worst level in decades, local REALTORS® still giving back

Posted by Aaron Bosshardt, COO, Bosshardt Realty, 11/27/08

Even a 30 year veteran like Carol Bosshardt, Broker of Bosshardt Realty Services, Inc., says that this is the worst market in her lifetime: "Even in the 1980s, when rates were close to 20%, we were still doing deals." According to FAR statistics, the Gainesville market is down close to 35% in activity for the third quarter, and that was before the big credit freeze hit.

Yet that didn’t stop local agent Loralee Miller from organizing an aggressive food drive that saw the REALTORS® raise a carload of food and nearly $800 for the Gainesville Community Ministry. Officials were ecstatic about the donations. Many fear that, with the recession, donations will be at an all-time low this holiday season.

One reason the Bosshardt group was able to raise so much money in such difficult times was through the efforts of Sandra Lehrer.  Lehrer, a senior vice-president with the company, agreed to match monetary donations from all agents at Bosshardt's Haile Plantation office.

There is still time to act. We encourage you to contact Gainesville Community Ministry to make donations for the holidays.

Top 10 Terms Every First Time Home Buyer and their REALTOR® Should Know

Posted by Aaron Bosshardt, COO, Bosshardt Realty, 11/20/08

1. Who is a first time home buyer?
   Anyone who is a US Citizen that files taxes and has not owned a home within the past three years qualifies as a first time home buyer. Some non-US citizens may qualify as first time home buyers.
2. State Housing Initiatives Partnership commonly known as SHIP
   SHIP is a state program, sponsored by the Florida Housing Finance Coalition, that provides down payment assistance for first time home buyers who qualify. The less you make the more you will qualify for. The money is given to the local municipalities, so where the property is located will determine the rules and the source of funding. The City of Gainesville SHIP department doesn’t have quite as nice of a website. Alachua County's website is very informative. I would recommend startingthere, or whatever municipality you plan to buy in like Marion County or Ocala.
3. FHFC
   I mentioned this before. This website is a much underutilized resource, not only for first time home buyers but also buyer education in general. They have a guide to foreclosure prevention and a statewide affordable housing search.
4. Annual Percentage Rate or APR.
   This number is derived by a mathematical formula that calculates the fees you pay for your loan and amortizes it back into your interest rate. Don’t shop Interest rates, shop APR’s. Someone might quote you a low rate, but have high fees. The APR is the best indicator of the loan cost and is best used for price comparison.
5. Bond Money.
   That’s government money used to buy down the Annual Percentage Rate which makes your payment lower! When I was selling real estate, only the lenders knew who had bond money when they got it, and so the realtor and buyer knew only if they knew the lender. Nowadays in Florida, there is a First time home buyer wizard. It’s sort of like a calculator. You put in where you live and how many people are in your family and it tells you all about Bond money and SHIP money in your area.
6. FHA Mortgage.
   This is the mortgage you will most likely get. It’s a government-insured mortgage, and this mortgage is much better suited to first time home buyers than mortgages not insured by the government, called conventional mortgages. Right now, FHA still allows buyers to put as little as 3% down.  You get these loans from an FHA-approved lender, such as most banks and brokers; just make sure you ask if they are an FHA lender.
7. PMI, or private mortgage insurance, is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80% of their new home's value. In other words, buyers with less than a 20% down payment are normally required to pay PMI. PMI will be paid by you monthly, and it will be added into your Monthly Mortgage Payment. In FHA mortgages this is known as MMI and involves a fee at closing. It used to be set at 1.5% of the mortgage, but is now scalable based on your credit. The rumor is that soon all loans will require this upfront fee. You can finance it in to the mortgage amount.
8. Escrow
   This one actually has two uses. First is for the Escrow Deposit you will put down when you go to contract, sometimes referred to as a Binder. This money is placed in someone’s trust account. Be wary of builder contracts that allow them to use your deposit towards construction. Second, your monthly payment will have an “Escrow” account. Your payment includes your Principal, Interest, Property Taxes and Insurance or PITI. It doesn’t include your utilities, cable, and phone bill.
9. Housing Affordability index. This is a guide put out by the National Association of Realtors (NAR). You don’t really need to know this or look at it, but what you do need to ask yourself is what your personal affordability index is. Just because you are qualified up to a certain number doesn’t mean you have to spend that much. Figure out what monthly payment (PITI) you’re comfortable with and remember you will still have to pay for your cars, insurance, travel, utilities, groceries, TV, cell phones, childcare, and life insurance, etc.. Whatever you’re comfortable with.
10. $7500 Tax Credit. That’s right you get a $7500 tax credit if you close before July 1, 2009. For more info I ran across a pretty good article posted by Fred Chamberlin. This is a federal credit, so the same rules apply.

Market Outlook: October 2008

Posted by Lem Purcell, Director of IT & E-Business, Bosshardt Realty, 11/19/08

As you might imagine, our agents get the "How's the market?" question a lot these days.  Here's an inside look at our own Aaron Bosshardt's take and his advice to our Bosshardt REALTORS®.  In short, sales volume and prices continue to drop, but opportunities abound for those with cash, whether they be investors or move-up buyers.

Top 10 Reasons why now is the time to start buying residential homes for investment in Gainesville Florida.

Posted by Aaron Bosshardt, COO, Bosshardt Realty, 11/11/08

Well here is my crack at a real estate blog. I’ve wanted to start one for almost two years now, so in my own mind anyway I was ahead of the curve, now I’m late to the party. Feel free to comment anyhow you like. I could just as easily, and possibly will tell you, the top 10 things to consider before you buy investment property in Gainesville, Florida.

Top 10 Reasons why now is the time to start buying residential homes for investment in Gainesville.

1. Remember that before the big boom investing in real estate was always a marathon, not a sprint. Think 5 years out at least when buying real estate for investment.
2. Interest rates are pretty darn low, for an investor they are right around 7 percent
3. Inflation is coming in 2011. I don’t really know anyone who is in the know that doesn’t believe inflation will start to really drive up towards the end of 2010. That’s good for real estate, bad for mortgage rates, and thus good for those who have low fixed term mortgages. Remember the cost of borrowing money will go up; so will rents and asset values.
4. Property Taxes will be going down. Next year will be the first year the rapid decline in real estate prices starts to reflect in our property taxes. The values used for our property taxes in Alachua County, this year were based on home prices as of January 1, 2008. According to the Gainesville MLS, home prices rose 3% from the previous January. They are already down in excess of 20% year to date.
5. The golden rule of a real real estate investor is “Buy low, never sell.”  Of course, you never know when the bottom is in, but in our area, chances are you won’t get much of a better price then you will in the next couple of months.  The credit markets are frozen and it’s our local off-season. There is oversupply, pricing is low, and negotiating power is high.
6. Warrant Buffett summed it up better than I in the NEW YORK TIMES.  Fear is temporary, greed is permanent.
7. Negotiating power is back. The real real estate Investors have always had to put down 15% cash or more to purchase an investment. Leverage is good, but like anything else not in excess. There is just not the same level of competition for well-priced homes with the primary home buyer now facing much more stringent down payment requirements.  We always felt like we were treated so poorly by the banks in comparison.  I guess in the end it was the primary home buyer that was treated poorly.
8. Every rags to riches story there is starts with real estate investments.  It would be nice to jump right into the stock market like Warren Buffett, or buy apartments and strip malls.  Very few people have the capital to do that at first. Think big, but start small and be realistic.
9. Cap on non-owner occupant increased assessed value increases.  In January we passed a cap that says no property’s assessed value may increase more then 10% regardless of market value. Yeah long gone are the days of 10% price appreciation in the current low inflationary environment of the past 10 years, but perhaps not with respect to the return of inflation. It seems that Public policy is turning in favor of the real estate investor, Both Amendment 3 and Amendment 6 passed in November 2008 and both offer some value to a long term investor.
10.  The insurance crisis is over, for now, Insurance rates for properties and liability have dropped, both for the individual landlord and the Condo and homeowners’ associations that pass them through dues.  If your rates haven’t gone down the past two years you’re not with the right insurance broker.