Drew Peterson

Each month, the Orlando Regional Realtor Association publishes its Market Pulse, a report containing essential market data. Here is our breakdown of the June edition:

First, the bad news:

1.) The number of new contracts written in May actually decreased from the number written in April. It's the first month-to-month decrease since December of last year. Although we are almost out of the traditional "buying season" (March to June), new contracts still should have shown an increase.

2.) The average mortgage rate increased to 5.94%, the highest it's been since November of last year. The higher the interest rate a lender charges, the less a buyer has to spend on a home.

3.) Overall inventory decreased from 25,436 in April to 25,015 last month, a change of less than 2%. Although the fact that inventory decreased is good news, the glacial pace at which the number declined puts it in the bad news category. At this rate, it will take us two to three years to return to a balanced market.

Now, the good news:

1.) Total sales closed increased from 1,231 in April to 1,276 last month. Although it's a small change, it indicates buyers are still in the market for homes.

2.) The number of new listings decreased to its lowest level since December 2007. We'd like to see this number decline even further, as only serious sellers should be listing their homes in this market.

3.) The total number of properties under contract increased for the fifth straight month to 3,225. Although many of these under contract properties are short sales and, therefore, a good number of them won't close, this statistic is another good indication that buyers are out there and ready to purchase.

This is yet another month of mixed news. Overall, we seem to be heading in the right direction. Inventory is down, sales are up. However, the rate of change is glacial, indicating that we are far from out of the woods.

Our recommendations for buyers and sellers have changed slightly.

Potential sellers still need to make a fairly quick decision whether to sell or hold. Although depreciation has slowed, and is likely to continue to slow for the foreseeable future, homes are still losing value. Price is still a major concern for buyers, and the abundance of foreclosures and short sales has put pressure on general re-sales. Hold or lease if you can, plan to present a well-priced, immaculate home if you cannot.

Buyers still need to get out there and buy. Many lenders are now using credit score as the major determinant of interest rate. For example, a buyer with a 650 score might get a 6.5% rate, while a buyer with a 700 credit score might get the same loan for 6.125%. Buyers who wait will likely find themselves paying a higher interest rate. Additionally, the number of foreclosures is reaching a peak, forcing banks to let go of properties for less than market value. As foreclosures begin to decline, banks won't be as desperate.

As always, we are happy to speak with you about any questions or concerns you might have about today's market. Simply contact us at 407-222-8257 or contact@cflistings.com.

You've probably heard the terms short sale, bank-owned, pre-foreclosure and foreclosure before. It's hard not to have heard them, given the recent attention they've garnered. However, what do they mean? What are the differences between them? Which option might be best for you? Here's our breakdown of the terms to help you answer these questions and more:

1.) Short Sale a.k.a. Pre-Foreclosure

Definition: Occurs when a homeowner is behind on his payments and owes more than the property is worth. The home is listed for sale until an offer comes in. The bank, after reviewing the owner's reasons for being delinquent, agrees to take less money than is owed, allowing the owner to sell.

Disadvantages: The major disadvantage is time. Once you submit an offer to the bank, it can take anywhere from 30 days to six months to get an answer. Additionally, other buyers can make offers while yours is under consideration. If they offer more money, you are forced to increase your offer or find another property. Finally, short sales can be in poor condition as sellers no longer have the money nor the motivation to perform routine maintenance and/or repairs.

Advantages: The possibility of getting a property below market value is the major advantage of a short sale. There's no telling what sales price a bank will ultimately approve, so there is the possibility of getting a great deal. Another advantage is that you, as a buyer, can choose which contract and addenda to use. Unlike in a bank-owned property, you are still executing a contract with an individual seller, so you set the terms you want.

2.) Bank-Owned a.k.a. Foreclosure

Definition: Occurs when a bank actually takes ownership of a property and lists it with a Realtor.

Disadvantages: The major disadvantage of buying a bank-owned property is the "As-Is" provision. Banks sell properties "as-is" and will not make any repairs or warranty the property in any way. Since the previous owners likely left against their will, bank-owned homes are typically not in the best shape. Additionally, banks are very strict with the purchase contract. You must use the bank's form and accept all of the bank's terms.

Advantages: Just like with a short sale, there is the possibility of getting a great deal. However, because the bank already owns the property, you do not have to wait to find out if the contract is accepted. In most cases, you submit your offer and hear back from the bank within 48 hours.

The bottom line with both bank-owned properties and short sales is the possibility of buying a home for less than market value. However, both transactions come with increased risk. Either way, it's best to speak with your Realtor about whether either option might be right for you.

Welcome to our blog series on choosing the right Realtor. Last week, we discussed the initial phone interview. If you missed that blog, click here to get caught up. This week, we'll be covering the third and final installment in the series, the face-to-face interview.

Ideally, you want to set up in-person interviews with at least three Realtors. These interviews should be conducted at your home and everyone who is involved in the decision making process should be present. The length of these meetings can vary widely depending on the Realtor, but plan to set aside at least an hour and a half.

One quick note about these interviews. You'll probably hear Realtors refer to them as "listing presentations". We don't like this term simply because it implies the Realtor will do most of the talking. In an ideal listing interview, the Realtor will ask you lots of questions and vice versa.

A typical listing interview will start with the Realtor asking you to give him a tour of the house. This presents an opportunity for both you and the Realtor to get to know each other in a casual atmosphere. It also familiarizes the Realtor with the property and allows him to note items that need attention to maximize your selling potential. Be sure to point out any unique features of the home, items that need repair, upgrades you have made, etc. *If the Realtor does not ask to see the home before starting the actual interview, that is a huge red flag.

Once the tour is completed, it's time to start the listing interview. Since you have already asked about the Realtor's experience and background during the phone interview, this time should be spent asking the Realtor about his pricing and negotiation strategies, showing policies and procedures, commission rates and transaction fees, and marketing and advertising plans. There are no "right" answers here, so you are really just making sure the Realtor has a solid, workable plan for selling your home.

In addition to the questions you have for the Realtors, the Realtors should have questions for you. Although the exact wording will vary, each Realtor should ask about about your goals for selling, restrictions on showings, frequency and type of Realtor-client communication, and any other special needs you might have. It is vitally important the Realtor ask these questions and you answer them honestly. *If the Realtor does not ask these questions, or does not seem to listen to the answers, it is a major red flag.

At some point during the listing interview, the Realtor will ask for you to sign a listing agreement. Do not sign it! You should not sign anything until you have interviewed all the Realtors on your list and had time to review all the necessary paperwork. There are a couple reasons for that.

One, you want to interview everyone before making a decision. Even if the first Realtor really blows your socks off, resist the temptation to list right then and there. The other Realtors might blow you away even more.

Two, the paperwork to list a home can be somewhat complex and you should make sure you fully understand what you are signing. If you are not comfortable with anything in the listing paperwork, ask the Realtor if it can be modified or removed.

Once you have interviewed all the Realtors on your list and have reviewed all the necessary paperwork, it's decision time. We have listed a couple of red flags (not asking to tour the home first and not asking questions about your goals and preferences). We would highly recommend you pass on any Realtors that raise these flags. Otherwise, it's up to you to decide who you feel comfortable with.

Again, there are many different "right" ways to do real estate, so keep an open mind to the methods and practices of the Realtors. As long as they can back them up with a proven-track record of success, you should be in good hands.

Last week, in Part I of "It Pays To Be Choosy", we introduced the topic of choosing the right Realtor for the job. In addition to recommending you start your search in your very own neighborhood, we also put forth three basic guidelines you should keep in mind when interviewing agents. If you missed the blog, you can click here to get caught up.

At this point in the process, you should have a list of four to six Realtors and a general idea of the qualities you are looking for in the one Realtor who will ultimately represent you. So, how do you actually begin the interview process? We recommend a two-step process, starting with a 15 to 20 minute phone call.

The purpose of an initial phone interview is to immediately eliminate any Realtor who does not meet the three basic guidelines we discussed in our previous blog (relevant experience, listens to you, and you are comfortable with them). Therefore, you want to start by asking generic questions about the Realtors' previous experience in your area. Here are some recommended questions:

1.) How many homes have you sold in my area?
2.) How recent were those sales?
3.) How long did they take to sell?
4.) How many offers did you receive?
5.) How is the overall market in my area?

If the Realtor doesn't have any recent sales in your area, or doesn't answer any of your questions to your satisfaction, move on to the next name on the list. If the Realtor does have solid experience and provides satisfactory answers, ask the agent if he or she has any questions for you. A good listing agent will ask you a number of questions about your motivation for selling, where you plan on moving, how soon you need to move, the property itself, etc.

Once you have answered any questions the Realtor might have, it's time to decide whether or not to schedule a formal listing appointment with that person. Although you will have only spoken with the Realtor for a few minutes, it should be enough time to eliminate anyone without experience or anyone you simply cannot see yourself getting along with. Assuming the Realtor gets the thumbs-up so far, schedule a time to meet in person. Make sure to tell the Realtor about any time limitations you might have so he or she can schedule accordingly.

If, after the phone interviews, you do not have at least three Realtors to interview in person, go back to step one and expand your list. It's important you meet with at least three Realtors before you make any decisions.

That's it for this installment of our series on choosing the right Realtor. Check back on Tuesday when we'll discuss the final step before making a decision; interviewing the Realtors in person. As always, we welcome any feedback!

Each month, the Orlando Regional Realtor Association publishes its Market Pulse, a report containing essential market data. Here is our breakdown of the May edition (you can read the full report by clicking here):

First, the bad news:

1.) Once again, overall inventory remained virtually unchanged. Prices will continue to decline as long as there are over 25,000 homes on the market and only 1,100 or so sell each month.

2.) We touched on this in the previous point, but the number of sales closed last month was 1,147. That's an increase of only 27 from March and a far cry from the almost 1,600 homes that sold last April.

3.) The number of expired and withdrawn listings decreased from March to April. This goes to overall inventory. As long as sellers continue to keep their homes on the market at unrealistic prices or in poor condition, the inventory will remain high and buyers will take advantage of the oversupply.

Now, the good news:

1.) The average mortgage rate decreased from 5.94% in March to 5.77% last month. Lower interest rates increase the purchasing power of buyers, which translates into an expanded buyer pool.

2.) The number of new contracts written last month increased to 2,012. That's the highest amount since May of last year and is a strong indicator that buyers are re-entering the market.

3.) The average number of days a property was on the market last month dropped to 121 from 128 in March. Days on market is a good indicator of how well properties are priced. Therefore, a decline in the number indicates more reasonable pricing by sellers.

We were actually a little bit surprised by this month's report. There was a strong feeling among Realtors that overall inventory would decline by at least a thousand and total sales would increase by at least a few hundred. Since that didn't happen, we're still sliding down the hill, waiting to hit bottom.

Our advice to sellers and buyers remains much the same this month as it did last month.

Sellers remain in the unenviable position of having to decide whether to sell now or wait at least three or four years. Prices are still declining, so it's vital to make that decision as quickly as possible. If you're planning on selling to buy something larger, now is absolutely the best time to make that move. If you are in a position where you have to move, take a careful look at your overall financial picture to see if leasing the property makes more sense than selling.

Buyers are still in the driver's seat as far as the market is concerned. However, lenders are continuing to tighten the reins, making it more and more difficult to obtain a loan. We strongly recommend buying in the near future over waiting. Even though we haven't bottomed yet, the specter of higher interest rates and stricter lending guidelines make waiting a true gamble.

If you are interested in receiving market data for you particular neighborhood or zip code, please contact us and we would be happy to provide the information.