I read an interesting article about taxes in the State of Florida and people’s complaints that their taxes aren’t decreasing despite declining property values. I had assumed previously as a property owner in Naples, that if the property values decline, the property taxes would naturally follow. What I found out isn’t necessarily so and can be quite the opposite.

Since I homestead my primary residence in Florida, I’m covered by the ‘Save Our Homes’ Amendment which means that there is a 3% cap on the assessment of my property, not the amount of the tax increase. Within that law, there is a rule that I, as well as many others, never paid attention to called “the recapture rule”. The dichotomy is that the rule provides for increasing of property values in a declining market. The specific purpose of it was to offset any negative effects the the Save Our Homes Amendment would have regarding State and local budgets during such a declining real estate market.

Oh well… just another example of not having read the fine print before supporting something I felt would benefit me!

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With the advent of the market drop over the past few years or so, fixing up homes to make a profit on is looking more and more interesting for some people. If you are the type person interested in putting in some ‘sweat equity’, the prospect of purchasing a fixer-upper might look very inviting, however, there are some thing that you might want to consider before diving in.

Usually the biggest profits are made on homes that need only minor cosmetic fixes as opposed to those that are in need of major repairs involving structual changes. There are many homes out there that have been neglected and yet with a few cosmetic fixes can look fantastic and will be very appealing when you go to sell it down the road. Notice how I said ‘down the road’ and that is because no one is suggesting that homes can be purchased, re-habed and flipped like they were in the old days.

We can certainly find good fixer-uppers in this market, but the key is that with the large amount of inventory, we had better be prepared to hold them for a few years at least before taking that profit!

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Sometimes I find myself wishing that I had an ‘easy button’ to push while working on some of those hard real estate deals…You know the ones where you work like a dog, excited to find what you consider to be a gem of a property and have the customers drag their feet because they think that there will be a better deal around the next corner. The only saving grace is that the property immediately goes under contract, making you look like you knew what you were talking about. Yet they still wait!

I’m reminded of a gentleman I met years ago from the U.K. selling at a large home show. He had a product from England that no one here had access to and was making a killing. We talked about product selling and he told me he found it nuts that Americans selling the same products would discount them just to feel like they were gaining an advantage over other sellers despite the fact that they weren’t even making a profit. He went on to say that we coach our buyers to wait to see if they can get if cheaper and invariably they never end up buying at all. He said that doesn’t happen in the U.K. If people have similar products, they all sell it for the same price.

Now to get back to real estate, I’m not suggesting that it should necessarily be easy, but I find myself wondering from time to time whether some of that discount mentality doesn’t spill over in our real estate market more than ever because of the lagging economy.

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Canadians interested in selling their homes are suddenly finding their market looking more and more like our market here in the U.S., a strong buyer’s market, and it is a change that they aren’t liking. They are being told by their real estate agents that if they list their home, it might not sell because of the change in the market. It was just a few short months ago that the sellers were totally in control of the market and were getting the high prices they listed at.

The change in the Canadian Market begs the question as to how deep the effect will be regarding Canadians interested in purchasing South Florida real estate. There is no question that this trend will have an effect and that is certainly a huge cause for concern since it was the Canadians who supported much of the real estate buying this past summer.

With the fear in Europe causing a wait and see attitude, we don’t need that coming from our northern friends!

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Some people will undoubtedly misconstrue today’s financial aid rate cut of 0.50% by Ben Bernanke and the FED thinking that it will lower it will lower the mortgage interest rates, when in fact the opposite could happen. Certainly the move was unprecedented and quickly followed by major central banks around the world in a move to stave off financial destruction. The cut followed the $700 billion rescue plan that no one is calling it a bailout anymore.

If confidence is restored in the stock market and financial markets, then mortgage interest rates will rise, because rates actually benefit from a lack of confidence in the markets causing them to drop.

For those people still hanging on to option arm loans that will be maturing soon, one would suggest converting them to 30–year fixed rate mortgages while the rates are still low. (Again, coming from New England and owning property when the mortgage rates were 18%  and higher, the rate would have to climb above 10% for it to look high to me.)

The point is that the time to convert may never be better and it is exactly what I will be doing tomorrow to get the 30–year fixed rate locked in!

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If you are contemplating selling your home in today’s strong ‘buyer’s market’, you have to price it correctly or it will just not sell period.

In determining an asking price, it is important that the listing price be exact. There have been recent studies which have shown that people are willing to pat more if that listing price is exact. For example rather than trying to sell your home for $450,000, you might list it at $449,475. The studies have shown that there is a psychological benefit when dealing with precise numbers. Oddly enough people tend to think that numbers that end in digits are actually smaller than those ending in zeros. Also an interesting factor is that when people do property searches on the internet, properties ending in digits will pop up more often than those ending in zeros. Go figure!

There is also the philosophy of ending numbers in nines. Often you will see prices advertised ending in 99 such as $24.99. Again this is a psychological ploy to entice the customer who they believe does not pay attention to the digits in the cents column. When you think of how you shop, it does seem to make sense.

The bottom line is that you might want to consider this research when pricing your home, because it’s all about the psychology of pricing! 

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I’ve always considered myself a ‘networker’ probably well before the term even became a term. In real estate, we all look toward our happy customers for referrals, and actually it doesn’t matter whether it is real estate or not, any business can benefit from the power of word-of-mouth marketing.

A prospect generated from from a word-of-mouth referral is most certainly a better prospect than from other means because they trust the source and are less suspect. Multi-national companies have learned to value that type of marketing and as realtors, so should we. Many times we realize the power of referrals, but fail to direct our marketing efforts and activity in that direction.

In today’s real estate climate, I believe that to remain successful we should be thinking ‘outside the box’ when it comes to marketing and promotion. Certainly one of the ways is to identify our most loyal customers and direct a campaign specifically targeting them for referral production. It sounds simple enough, but again, we can easily tend to forget it.

We refer people daily to various businesses because it has been ingrained in our brain through slogans and other forms of advertising, so much so that when we hear it we immediately identify with that particular business. And so it should be for we realtors, whether it is a slogan or something else that makes us stand out. Our customers need to be talking about us in order to generate those referrals, so we’d better give them something to talk about. I’ve always said, if they aren’t taking about you, either good or bad, you aren’t doing anything!

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The Fall season here in Florida get us closer to my very favorite time of year when we can throw open the windows, turn the a/c off and finally “air” out the house. The good news is that it can last up to five months if the prevailing wind currents that bring us that cooler weather from the north remain in a certain pattern. Last year was a perfect example of that happening and it was great!

Coming from New England the one thing that I do miss living in Florida, (I should be used to it because I’ve been here almost 18 years,) is the changing of seasons. Here we effectively have what I call two seasons, the muggy season and the dry season or Summer and Winter. Now I’m sure that there will be people who will argue that as we transition into the Winter and Summer, there are two other periods of season. Maybe it would be somewhat different if the palm trees changed colors or when attending the high school football games, the air was a bit crisper.

Yet maybe sometimes I tend to forget the very reason I left New England for the warmer climate…those dreadfully cold Winters, the Summers that never were. I forget the Spring seasons that were nothing but mud everywhere from the melting snows or the Fall seasons when the colors of the leaves changed so quickly you totally missed it.

Maybe it’s not so bad down here after all!

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