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In The News... August 2010
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When insurers stop writing insurance
MIAMI – Aug. 31, 2010 – If Hurricane Earl flirts with the Florida coast, many property insurers will stop writing new policies. That, in turn, impacts homebuyers who need insurance to finalize their mortgage. Without insurance, they can’t get mortgage money; and without mortgage money, they can’t close.

Insurers have in-house rules about issuing new policies. For example, Florida’s property insurer, Citizens Property Insurance, stops writing policies in a wide area if a hurricane threatens. Some insurers rely on the National Weather Service to issue a storm watch or warning. If that happens, they stop writing policies in the potentially impacted areas.

In all cases, a homebuyer heading to closing while a hurricane threatens should contact his or her property insurance carrier to determine that company’s rules.

© 2010 Florida Realtors®
5 reasons homeownership trumps renting
NEW YORK – Aug. 31, 2010 – The seemingly endless run of bad housing news is discouraging some potential homebuyers from considering a purchase. But the truth is that the advantages of homeownership have very little to do with investment gains, and a lot to do with personal comfort and satisfaction.

Here are five of them:

• Be your own landlord. The bank can only kick you out if you don’t pay; a landlord can be much less dependable – deciding to sell the property or choosing to live there themselves.

• Paying the principal is forced savings. Yes, it’s possible that home prices will fall further. It is also possible that your 401(k) will lose value. But over the long haul, both are likely to enjoy modest gains in value.

• Fixed-rate mortgages never rise – and eventually you pay them off. With mortgage rates at record lows, people who buy now are locking in real bargains.

• Good schools. Family-sized rentals are harder to come by in areas with excellent public schools.

• Spacious properties in pleasant neighborhoods. Sizable homes in attractive communities are almost always owned – not rented.

Source: The New York Times, Ron Lieber (08/27/2010)

© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688
Real estate incentives going out of style
WASHINGTON – Aug. 23, 2010 – With home sellers trying to limit losses and the government restricting seller contributions, buyers have access to fewer cash incentives and other perks – such as cars, televisions, and appliances – for going through with a transaction. These days, experts say more sellers are attracting buyers’ attention by pricing competitively or lowering the price.

Other residential property professionals point out that buyers are taking into consideration that a family member could become unemployed, and they are making buying decisions based on one income.

“Gimmicks don’t work well when buyers have so many avenues to be educated about what’s for sale and what has sold and for what price,” says Aaron Dickinson of Edina Realty in Minneapolis.

Source: News OK (08/21/10) Buchta, Jim

© Copyright 2010 INFORMATION, INC.
FSU real estate program No. 2 in world
TALLAHASSEE, Fla. – Aug. 13, 2010 – The amount of scholarly research conducted by university faculty members and subsequently published in peer-reviewed journals is widely used to compare academic quality between institutions. And according to one such ranking, the real estate program in the Florida State University College of Business (FSU) is among the very best in the world.

An article published in the Journal of Real Estate Finance and Economics – an academic journal for scholarly papers on real estate finance – places FSU’s real estate program at No. 2 in the world based on the number of research published in three core academic real-estate journals from 1973 to 2008. That represents a jump from the No. 26 spot that the program held in a previous ranking.

Only the University of Connecticut ranked ahead of Florida State. The University of Florida and the University of California-Berkeley held the No. 3 and 4 spots.

“The caliber of research in the real estate program is of the highest quality,” said Caryn L. Beck-Dudley, dean of the College of Business. “These rankings reflect an immense effort from the internationally acclaimed faculty and a dedication by private donors to enhance our program.”

This year, U.S. News & World Report ranked the undergraduate portion of the program No. 9 among public institutions in the United States, and No. 12 among both public and private institutions.

© 2010 Florida Realtors®
If your home is uninhabited or rented, insurance coverage changes
McLEAN, Va. – Aug. 12, 2010 – In many neighborhoods around the country, “for sale” signs outnumber telephone poles, and some of those signs are looking awfully weather-beaten. Even owners of oceanfront properties are having trouble finding buyers, at least at a price that will cover the amount they owe on the home.

One way around this problem is to stay put until the economy turns around and the housing market recovers.

But if you’ve lost your job and need to move to find employment, that’s not an option. Even if you’re lucky enough to find a buyer, closing the deal could take weeks or even months.

In the interim, it’s not enough to ask your next-door neighbor to keep one eye on your property until the new owners move in.

You should also contact your insurance agent, or the company that provides your homeowners insurance.

Standard homeowners policies are designed to cover homes that are occupied. If you leave your home uninhabited for a month or longer, your policy may not cover damage or losses, says Michael McRaith, director of the Illinois Department of Insurance.

You could also expose yourself to lawsuits, McRaith says. If a child gets hurt while playing on your property, your insurance may not protect you from liability, he says.

The amount of time you can leave your home unoccupied before it affects your coverage varies, depending on your insurer.

Some insurance policies exclude coverage for fire-related damage if the property has been vacant or unoccupied for 30 days, says Richard McGrath, chief executive officer of McGrath Insurance Group in Sturbridge, Mass. For others, it’s 60 days, he says.

Other types of claims may also be excluded if your home has been left unattended. For example, State Farm’s homeowners policy probably doesn’t cover damage caused by vandalism after a home has been vacant for 30 days, spokesman Dick Luedke says.

Damage caused by frozen pipes may also be excluded if the home was vacant when the pipes burst, he says.

Adjusting your coverage

Once you notify your insurer that you’re leaving, a couple of things could happen:

• Your insurer will adjust your policy to one that covers vacant properties. If you know how long your home will be vacant, you may be able to buy a policy that will cover that period of time. You’ll pay a higher premium for vacancy coverage, but without it, you could be on the hook for the cost of repairing or replacing your home.

• You’ll have to get a new policy. Some insurers won’t cover vacant homes. In that case, you’ll need to find a company that will. Some insurers specialize in covering higher-risk properties, such as vacant homes, says Jeanne Salvatore, spokeswoman for the Insurance Information Institute, an industry-funded education organization.

An independent insurance agent can help you search for policies that will fit your circumstances.

Insuring rental property

If you manage to rent your home, you’ll be able to cover at least some of the cost of the mortgage. But here, too, you’ll probably have to pay more for homeowners insurance.

Insurers consider a rented home a higher risk than one that’s occupied by its owners because renters have less interest in caring for a property.

“When you’re a homeowner, your care and upkeep is probably going to be a lot better,” McGrath says.

If you rent your home, you’re going to need a landlord policy, Salvatore says. Premiums for these policies are higher than premiums for owner-occupied homes. But it will reimburse you for lost rental income if the house burns down or becomes otherwise uninhabitable, she says. A landlord policy will also increase your liability coverage, protecting you in the event that your tenant sues you, Salvatore says.

A landlord policy won’t cover your tenant’s possessions if they’re stolen or damaged in a house fire or other disaster, Salvatore says. If your tenant wants that kind of protection, he’ll need to buy a renters insurance policy.

Renters insurance is relatively inexpensive – premiums average $150 to around $200 a year, depending on the state where the rental property is located. Renters insurance also provides liability coverage in the event that one of your tenant’s houseguests falls and sues him for negligence.

Copyright © 2010 USA TODAY, a division of Gannett Co. Inc., Sandy Block.
Deadlines loom for Fla. property taxpayers
OCALA, Fla. – Aug. 11, 2010 – August is Property Tax Appeal month in Florida. Notices of annual tax assessments are mailed to taxpayers in August, and the window of opportunity closes soon for homeowners who want to contest their property tax assessment.

The tax notices also include information on filing an appeal with the local Value Adjustment Board (VAB), which generally includes a September deadline for filing a petition. VAB Notices include three values: market, assessed and taxable. Taxpayers can appeal market value if they believe their assessments are too high. If successful, as a result of a VAB Hearing, their property taxes may be lowered.

However, the VAB must receive a petition requesting a hearing by the deadline date to be assured of an administrative appeal – postmarks do not count.

Petitions are one page forms and can be obtained from the Florida Department of Revenue, the Value Adjustment Board in any Florida county, or the property appraiser in each county.

Some guidelines for property owners who wish to appeal:

• Separate petitions generally are required for each property id or parcel number.

• Fees may be charged for each petition filed, but $15 is the maximum fee a VAB can charge.

• Taxpayers can file petitions to appeal their assessments, or their agents or attorneys can represent them. Petition forms include requirements for anyone who represents a taxpayer before the VAB.

• Complete petitions must include the name of the petitioner (taxpayer or representative), property identification numbers, property addresses, the address of the petitioner, sworn signatures, times requested, and boxes to check requesting information or certain conditions.

Commercial Property Services (CPS), a licensed Florida real estate brokerage that appeals property taxes, recommends that petitioners check a box asking for property record cards, which can include information that helps with an appeal. Many record cards identify the appraisal method used by the taxing authorities, as well as cost calculations. Some records include income data.

© 2010 Florida Realtors®
Fed chief sees long road back to economic health
WASHINGTON (AP) – Aug.3, 2010 – The nation faces a long road to get back to good economic health, Federal Reserve Chairman Ben Bernanke said Monday.

Bernanke said progress is being made after the deepest recession since the 1930s. The worst of the financial crisis is behind the nation and the economy is growing again, he pointed out.

“But we have a considerable way to go to achieve a full recovery in our economy, and many Americans are still grappling with unemployment, foreclosure and lost savings,” the Fed chief said in a speech to an annual meeting of Southern lawmakers in Charleston, S.C.

It marks Bernanke’s first public comments since the government report released Friday showed the recovery lost a lot of momentum in the spring. The economy grew at a pace of just 2.4 percent in the April-to-June quarter, down from 3.7 percent growth at the start of the year. It was the slowest showing in nearly a year and is too weak to drive down near double-digit unemployment.

The bulk of Bernanke’s speech was about challenges facing cash-hungry state and local governments. Facing budget shortfalls, state and local governments have been cutting their spending and laying off workers to save money.

Bernanke cited those spending reductions as one of factors behind the “sluggishness of the national recovery.”

Economists in an AP Economy Survey, released last week, identified budget woes at state and local governments as a “significant” or “severe” threat to the economic recovery.

State and local governments cut their spending in the first three months of this year at a 3.8 percent pace. That was the biggest cutback since the second quarter of 1981, just before the economy entered a severe recession. They did boost their spending in the second quarter. Skeptical economists, however, think the figure will be revised down, and they predict state and local governments will resume their cutting through the rest of this year.

Fielding questions after his speech, Bernanke said one of the lessons learned from the Great Depression is that Washington policymakers shouldn’t pull in economic supports too quickly.

For Congress, that means not moving to slash the deficit or boost taxes right now. And, for the Fed, it means keeping interest rates low.

“We have to be careful about tightening too quickly in the near term — we can maintain some continued support for the economy in the very near term,” Bernanke said.

Economists said the Fed is all but certain to hold rates at record lows when it meets on Aug. 10 and repeat a pledge to keep them there for an “extended period.”

Bernanke didn’t use his speech to talk about any new steps the Fed might take to stimulate the economy.

Delivering the Fed’s economic report to Congress last month, Bernanke said the Fed stood ready to take new action to bolster the recovery if the economy flashed signs of backsliding.

The Fed could revive programs to buy mortgage securities or government debt. It could cut to zero the interest rate paid to banks on money left at the Fed or lower the rate banks pay for emergency Fed loans.

The rest of Bernanke’s assessment of national economic conditions mirrored his comments delivered to Congress. For instance, he repeated his observation that Europe’s debt crisis had roiled Wall Street, making financial conditions “somewhat less supportive” of economic growth in recent months.

© 2010 The Associated Press, Jeannine Aversa, AP economics writer. Associated Press Writer Bruce Smith contributed to this report from Charleston.

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