Foreclosures are bank owned properties, that were acquired through nonpayment of lenders, tax liens and HOA and Condo associations dues. In most cases, a combination of all of these may be the cause. In most cases, these bank foreclosures are purchased for considerably less than the homes surrounding them. Foreclosures can be reduced as much as 33% below the normal market value for non-foreclosures and short sales. In most cases, the prices are already reduced when you see these homes on the internet or have received info from you realtor. Offering 50% of the asking price is a public misconception that you buyers need to know.

The banks are willing to negotiate on the price and closing costs somewhat, but they will dictate the terms of the contract and who will be the closing agent. Be prepared to make an offer, have the bank come back to you with an approval by sending their own counter offer and addendums completely re-done with your offer price and closing cost amount with the property address and your names. Most likely, the rest of that counter will have a closing date of 30 days after the seller signs the counter, a certain number of days like 5, 10 or even no days for an inspection. Most likely the “seller” will not address or pay for any repairs, termites, mold or structural damages. Your lender and FHA/VA lender will carefully look at this report and determine whether the home appraises for your loan amount and will evaluate whether the home needs too much repairs to qualify you for the loan. Be prepared to have to make a decision whether to accept their counter and addendums or just not get the home. Very few, bank owned, home “sellers” will allow you to negotiate anything once they send their own documents. If you need an extension on the closing date and/or financing, you will most likely have a clause in their counter offer, of a per diem and an additional, non-refundable deposit.

The “sellers” want to use their own attorneys and title companies to be the closing agents. You can have your own escrow agent hold your deposit until the closing agent requests it to be transferred, but you will not be represented by anyone unless you retain your own attorney to perform an independent title search. I really suggest doing this. If you don’t find out until after closing, that there are problems that are clouding the title, this would prevent you from easily transferring title when you decide to sell. The ownership of the property needs to be ascertained as to whether the “seller” really owns it or if the proper person actually was the one to sign all of the documents.

The “sellers” will have to clean up most evident title issues in order to provide you with a clear title at closing. These can include: tax liens, mechanics liens, HOA and Condo Association liens at their own expense.

Does all of this sound scary? The uncertainty of this real estate transaction actually closing, the title work performed correctly, the quality of the title insurance policy, the inspection and appraisal results can be very stressful. Some buyers just do not think it is worth the risk, but if you find a good realtor that is experienced and skillful in handling foreclosures and also retain an attorney to perform your own title search, it could be a great investment for your future. The savings on a foreclosure will most likely pay off with reduced risk if done correctly!

Homeowners with a new mortgage that is covered by mortgage insurance will be able to claim a tax break on their mortgage insurance this year. The deduction can be taken for insurance on a principal residence or a second home. The mortgage insurance deduction will especially help first-time home buyers who are unable to put down 20 percent of a mortgage.

The annual tax break from the deduction will be worth around $350 per taxpayer who qualifies with an income of less than $100,000 and those who acquired their loan between 2007 and 2010. About one in 10 residential mortgages is covered by private mortgage insurance.

The new tax deduction can be taken for both private mortgage insurance and insurance provided by the Department of Veterans Affairs, the Federal Housing Administration and the Rural Housing Administration.

Private mortgage insurance only helps to protect the lender, not the homeowner. If a borrower defaults, the lender is unable to recover costs after foreclosing on the loan unless there is mortgage insurance on the loan. With 100% more foreclosure this year compared to last year, more lenders are requiring mortgage insurance these days because of the increased risk in the marketplace.

Mortgage insurance premiums should be reported in Box 4 of Form 1098, which borrowers get from their lenders each year.

For most customers the effects really depend on where they are in the purchase process. For those just starting to look for a new home, the effects are negligible, at most they may have to change their minds on where they had hoped to purchase or they may lose out on some financial incentives that may have been pushed by the company. Buyers who have made an initial deposit may lose all or part of their deposit, wait years for their house to be completed while the builder sorts out its financial troubles or for another builder/developer to purchase the project.

Those who have already moved into their homes may find themselves in half finished homes and or communities where all work has stopped. They face questions, such as who handles problems that the inevitably come with new construction, what happens to amenities that were promised, can contractors have put liens on their properties, and who takes care of the management of the community.

While it is by no means an easy task, there are some precautions home buyers can take to avoid falling victim to developers and builders that may be on the brink.

1. If you are reading about a company that is having financial problems, simply take their communities off of you list of potential homes. While you may be able to find “deals” the problems you will have if they fail outweigh any savings you may think you will have.
2. Drive by the community a few times each week, not just on Saturday. Warning signs are obvious, if there has been a lot of construction, and all of a sudden it stops – do not buy.
3. Check with a few of the contractors and ask if they have had any trouble getting paid. Any hesitation in answering your questions could be a sign of trouble.
4. If people have moved into the community, ask them how work is progressing and if they are having trouble getting their punch lists completed.
5. Work with a buyers Realtor. By working with a Realtor that represents your interests, it will be much easier for the average home buyer to navigate these waters, and it does not cost the buyer a penny to have their own representation. Be wary of any developer or builder that does not ask if you are working with a Realtor, and remember that the sales staff at any community or development represents the developer/ builders interests – not yours!

In a market like this “caveat emptor” – buyer beware has a special importance.

• Double the homestead exemption, but only for homes valued at more than $75,000 and not for school taxes.

• Allow owners of homestead property to transfer up to $500,000 in Save Our Homes benefits, including school taxes, to a new home.

• Impose a 10 percent assessment cap on non-homestead property for the next 10 years. The cap does not apply to school taxes. After 10 years, voters will have the option to restore the 10 percent cap.

• Allow businesses to exempt $25,000 in taxes paid on computers, office equipment and other personal property.

This will provide some relief to Florida residents, second home owners, and investors, but does not provide any assistance to first time home buyers.

Article VII, Section 6 of the Florida State Constitution extends homestead protection to “every person who has the legal or equitable title to real estate and maintains thereon the permanent residence of the owner, or another legally or naturally dependent upon the owner…” Accordingly, to qualify you must own the real estate and make it you principle residence. You can own it individually, jointly or as the beneficiary of a trust holding the title.

When to File

Generally, initial application for property tax exemption must be made between January 1 and March 1 of the year for which the exemption is sought. The owner of the property must appear personally at the County Property Appraisers office and complete a Form DR-501 application for a tax exemption.

At the time of application it is required to produce a copy of:
1) Recorded deed reflecting property owner, or alternatively, a tax bill reflecting the legal description and owner’s name;
2) Florida automobile registration;
3) Collier County voter registration card;
4) Social Security number

Filing Deadline

To be entitled to a homestead exemption for assessment purposes for the current year you must be a record titleholder as of January 1st, however, an application for homestead exemption can be applied anytime after a new residence is acquired. The deadline for any current yea application is March 1st. If an application is made after March 1st, the exemption is lost for tax purposes for the balance of the year but will be applied to take effect for the following year. Once homestead is applied for, it will roll over automatically every year until you vacate the property as your primary residence.

Tax Savings
Once homestead is properly declared, Florida law provides the homeowner a $50,000.00 exemption from real estate tax assessment. For example, if a home is assessed at a market value of $250,000.00 the $50,000.00 of this value is exempt from taxation thereby computing the property taxes on only $200,000.00. With and annual tax milage rate of approximately 1.5%, this exemption equates to an actual savings of $375.00 annually.

Assessment Cap Savings
Obtaining homestead status caps the amount a homeowner’s property can be reassessed annually to 3% or to the percentage change in the Urban Consumer Index, which ever is lower. Annually properties throughout Collier & Lee County are reappraised to reflect the actual current market value. In the past this gas led to dramatic increases in certain years, however, due to the recent TRIM amendment to the Florida Constitution, the property owners are beginning to receive additional savings by applying for homestead exemption.

Third Party Creditor protection
The Florida Constitution provides homestead property with protection from third party creditors. The only exemption is if a property owner pledges his or her homestead property as security for a mortgage or improving the property and thereby subjecting the property to the construction lien law. Even after a property is sold, if there are judgment liens against the property owner provided the homestead proceeds are reinvested in another homestead property, they are again immune from third party claims.

Additional Exemptions

$500 Widow’s and Widower’s Exemption
Any widow or widower who is a bona fide Florida resident may claim this exemption. On remarriage, the widow or widower is ineligible for the exemption. A person who is divorced before the spouse’s death is not considered a widow or widower.

$500 Disability Exemption
A Florida resident who is totally and permanently disabled may qualify for this exemption.

$5,000 Disability Exemption for Ex-service member
An ex-service member disabled at least 10% in war or by service-connected misfortune may be entitled to a $5000 exemption on any property owned by the ex-service member.

$500 Exemption for Blind Persons
A Florida resident who is blind may qualify for this exemption. If claiming exemption based on blindness, the applicant must have a certificate of blindness issued by the Division of Blind Services of the Department of Education, the Federal Social Security Administration, or the Veteran’s Administration.

Exemption for Totally and Permanently Disabled Persons
1.Real estate used and owned as a homestead by a quadriplegic, less any portion used for commercial purposes, is exempt from taxation.
2.Real estate used and owned as a homestead, less any portion used for commercial purposes, by a paraplegic, hemiplegic, or other totally and permanently disabled person, who must use a wheelchair for mobility or who is legally blind, is exempt from taxation.
A person seeking exemption under number 2 above must meet gross income limitations. Gross income includes veterans’ and social security benefits. The gross income of all persons residing in the homestead for the prior year cannot exceed $14,500. However, beginning January 1, 1991, the $14,500 limitation will be adjusted annually. The adjustment will be based on the percentage change in the average cost-of-living index of the immediate year compared with the prior year.
If filing for the first time, a certificate of total and permanent disability from two licensed doctors of this state or from the Veterans’ Administration is required.

Additional homestead exemption for persons 65 and older
In accordance with s. 6(f), Art. VII of the State Constitution, the board of county commissioners of any county or the governing authority of any municipality may adopt an ordinance to allow an additional homestead exemption of up to $25,000 for any person who has the legal or equitable title to real estate and maintains thereon the permanent residence of the owner, who has attained age 65, and whose household income does not exceed $20,000.
Beginning January 1, 2001, the $20,000 income limitation shall be adjusted annually, on January 1, by the percentage change in the average cost-of-living index in the period January 1 through December 31 of the immediate prior year compared with the same period for the year prior to that. The index is the average of the monthly consumer-price-index figures for the stated 12-month period, relative to the United States as a whole, issued by the United States Department of Labor.

Please consult your tax advisor for additional information concerning the Florida Homestead Exemption

Any real estate agent can help you with the first four on the list. As an experienced & knowledgeable buyer’s agent, I can guide you through the environmental issues that seriously affect the value and price of lots in Golden Gate Estates. As a listing agent for GGE lots, I have learned and implemented the steps involved in the determination and process of preparing a lot for sale when wetlands are present.

Wetlands V. Uplands-What it means in dollars and cents!

The presence of Wetlands can seriously affect the purchase price of a GGE lot.

The rule of thumb is “the cheaper the lot, the more wetlands issues there are”. The cost and time needed for permitting has a direct impact on the bottom line!

The wetlands issues are made up of state protected exotic plants and trees, soil types, and depressional vs. non-depressional land. As a buyer, you should always ask for a DEP(Department of Environmental Protection) report. This report will state whether there are wetlands present and if so, whether an ERP( Environmental Resource Permit) is required. As a buyer or seller, if you have determined that the lot has no report, you will have to get a DEP report (free for now for the informal report for lots up to 2.74 acres). This could take up to 2 months. First, the lot must be staked on all corners with a path up the side of the lot if needed( $150-$300). You could also hire a private consultant that can usually do a wetlands/uplands report within a week for $150-$500 depending on the size of the lot. They can then submit it for a quick review from the DEP for a fee of around $150. The DEP always has the final say!In some cases, when the lot is only partially wet, a site plan can be drawn by a private consulting company, submitted and approved by the DEP that would avoid the need for the ERP. If an ERP is required, it could take up to 90 days and cost anywhere from $ 600 to $1000 in addition to the cost of a site plan which is around the same price depending on the size of the lot. A private consultant can be hired to obtain this as well. Pricing differs between the different companies. Once the ERP has been issued, and before the construction permit has been obtained, Mitigation fees must be paid to a designated bank in the form of credits. For example, a 2.45 acre lot has a site plan that disturbs .45 of the wetlands will have to pay .25 credits which can run around $8000 to $9000 in fees.

Upland lots would not require anything more than a DEP report or a private report stating that an ERP is not needed to build. At this point, all you need is a construction permit!

In Summary, the environmental issues that exist in GGE are very complicated. Make sure you find a real estate agent that is very knowledgeable and hands on with these issues.
My real estate focus is primarily in GGE homes and land. I will assist you through the steps involved with either purchasing or a listing a GGE property.

Many homeowners can’t afford or are not eligible to refinance or sell their homes due to higher lending standards and falling home and condo prices.

Currently mortgage debt forgiveness for foreclosure or renegotiation of home and condo loans is considered as taxable income.

On October 5^th, the House approved legislation to help homeowners facing foreclosure or bankruptcy.

No taxes would be owed on the value of any debt forgiven or written off.

“I urge the Senate to swiftly consider this legislation and make it temporary”, President Bush said in a statement.

The White House is considering this bill, but only temporary relief for three years.

The Mortgage Bankers Association expressed strong support for the bipartisan tax-relief bill.

I expect Short Sale homes and condos will significantly increase now that the fear of 1099 taxable income will no longer be a haunting threat.