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New home prices in Ocala Florida

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Below is an article I saw in the Florida Realtors newsletter that I get every day. It talks about new home prices and how builders can’t afford to build lower priced homes. I think this is something buyers don’t understand. This is especially important to understanding new and newer home prices in Ocala. When the real estate market crashed in 2007 home prices fell too low for builders to build new homes. No one started a major new subdivision until just last year. Many resales were selling for $70 to $90 sqft of living area when new home builders need $110 to $130 sqft minimum to make money. This shows that prices don’t just go down for new homes builders stop building. There still are lower priced homes here but they are from the 80’s to the early 2000’s. Newer homes, 2004+, are at a premium as so few new homes were built during the Great Recession. That is not to say newer home prices here in Ocala are high. In fact they are quite low compared to some other parts of the country.

Lower-priced homes ? Builders can’t do it

CHICAGO – June 13, 2016 – Builders find it increasingly difficult to build a home for under $150,000, despite rising consumer demand for more affordable home options.

The median sales price of a new single-family home in 2015 was just under $300,000, according to the National Association of Home Builders; and about 78 percent of new homes were priced between $150,000 and $500,000. Less than 6 percent were priced under $150,000, and an even smaller share was priced under $100,000.

Yet, a 2015 Home Buyer Preference Survey conducted by NAHB shows that 31 percent of recent or prospective home shoppers say they expect to pay less than $150,000 for a home. Fifteen percent expect to pay under $100,000.

“The costs of acquiring land, developing it into a lot and constructing a home on it often make it impossible to produce a new home at a price substantially below $150,000,” NAHB notes on its blog, Eye on Housing.

Government regulation on a new home alone accounts for 24.3 percent of the price of the home – or about $84,000 based on the average new-home price.

“Cost factors like these leave little mystery about why the lower 30 percent of the home buying public is often restricted to the market for existing homes,” NAHB notes.

Source: “New House Price Data Shows Why Costs Are a Problem,” National Association of Home Builders’ Eye on Housing blog (June 6, 2016)

© Copyright 2016 INFORMATION, INC. Bethesda, MD (301) 215-4688

Ocala deed restrictions

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junk car and over grown lawn in front of home's garage

I get asked a lot about Ocala area deed restrictions. Let me start by saying that no one dislikes authority figures or being told what to do more than me. However, as you can see from the picture above there are good reasons for deed restrictions. Try selling your house if you live next door to that guy. I took this picture while walking my dog in the neighborhood next to where I live.

If there is a mandatory HOA you should be given a copy of the deed restrictions to read before making an offer. Most are pretty much common sense like no mobile homes or that you can’t park your RV or boat on the front lawn. Others might bother some people.  For example, you can only put up a certain kind of fence or you can’t have a shed in your back yard. Adult communities with 55+ restrictions are another example.

If you can’t imagine living with deed restrictions you do have options in the Ocala area. There are a number of sub divisions with either no or very few deed restrictions. There are older communities that have let them expire. There is also agricultural zoning but if the house is in a sub division the zoning can be over ridden by the deed restrictions.

 

Reasonable Expectations in Home Buying

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I had a buyer recently who thought a home that was built in 2004 needed a new air conditioner even though it was in working condition. My buyer thought that she should deduct from the list price the cost of a new AC along with a laundry list of renovations that she needed to make the house more to her liking in determining her offer. Not only did she want a new AC but the most expensive Trane model made. I thought the home was in pretty pristine condition and it is normal for a home that age to have an original AC unit. I showed her sold comps from the past 3 months to determine fair market value. Homes in that community consistently sold for $5K to $10K off list price. The home we were looking at was priced right. Her offer based on her needed upgrades was $20K off list price. Needless to say the seller thought she was crazy and we were unable to make a deal. I’m telling this story for a couple of reasons. If the list price of a house is correct it already takes into account the age of the home and the community where it is located. You can’t just ignore sold comparables and make up an offer based on nothing other than your personal opinion.

Why you need a Realtor to help with new home sales

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The new home market is just beginning to pick up here in Ocala. When the market crashed in 2007 prices for resales fell so far below the cost to build new homes most building came to a stop. Only now, 8 years later, are builders having the confidence to start building again.

The reasons to have a Realtor work with you on a new home sale are many.

1) You want to see newer resales as well as new homes. Many newer resales still offer better prices or more upgrades or a premium lot. Many new home buyers want to see resales to be sure that they aren’t over paying for their new home.

2) You realize that the new home sales people are employees of the builder. A Realtor especially one that specializes in buyers has no allegiance to anyone but the buyer and will show you multiple communities telling you the pluses and negatives of each.

3) You want to see comparable sales before making an offer on your new home. Builders sales people won’t help you here. They would also like to pretend that resales in their same community don’t count.

4) You don’t feel comfortable negotiating. A Realtor negotiates for a living. Although builders don’t like to drop the price because it creates a low comp on their new home sales they do negotiate upgrades.

WARNING: builders are notorious for harvesting your contact info. If you call them, email them, request a brochure, you are added to their data base. Forever! That means they will not want to pay a Realtor a commission. Among ourselves, Realtors think who ever writes the offer gets the commission even if you talked to the listing agent previously. Builders operate by a different set of rules.

 

Online Home Values

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Sometimes buyers talk about a home’s value based on some sort of online tool like Zillow. Realtors do not look at online sites for home values. That is just a data base compiled from public records without any sort of interpretation. Think of it like this. There are 2 homes in the same community. They are the same size, same number of bedrooms ect. even the same age let’s say 1997. One has never had a single thing done to it. Original everything. The other has a new roof, AC and flooring. Online valuations have no way of knowing that.

When doing a CMA, a comparative market analysis, a Realtor looks at past sales on the MLS for condition. Out MLS retains sold listings complete with all pictures going back several years. We look at homes within certain parameters for size and age and we look at only recent sales. I like to only go back 90 days if at all possible. The price a home sold for last year is not a good comp especially in a constantly changing market. Buying a home is a huge purchase and you need the latest and best data you can get.

 

How I moved to Ocala

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I owned my home in Maine without a mortgage but I was not sure how much it would sell for or how long it would be on the market. My wife and I decided to buy our home in Ocala and then pay off that mortgage when we sold our existing home. Although we did incur closing costs associated with the loan it was pretty stress free in comparison to buyers I know see as a Realtor who sell and existing home and buy a new one here simultaneously.

You can make an offer on a home in Ocala contingent on the sale of your existing home if it is already under contract to close in a reasonable amount of time typically 30-60 days.

Buying a Home in Ocala contingent on Selling an Existing Home

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Sellers here in the Ocala area will often accept an offer contingent on the successful closing of a buyer’s existing home. The buyers home must be under contract with a reasonable closing time of say 30-60 days.

Florida real estate contracts have firm performance dead lines. When negotiating a contract the buyer and seller agree on a closing date. In general we expect to close on the agreed on date.

A problem can result if the buyer is from a state without a firm closing date such as New York. In NY for example they close on or about a given date. I have no idea how people can plan their next move or schedule movers or anything that way. On 3 separate occasions I have had buyers from NY who were not able to close on time here in Florida due to some delay with their existing home sale.

Real Estate from the Seller’s Point of View

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I occasionally take listings but the majority of my real estate work is in representing buyers. When working with buyers a lot are sellers at the same time usually in some other part of the country. In the Ocala area buyers often will make an offer contingent on the successful sale of their existing home which would have to be already under contract. Looking at buyers contracts I’m struck by several things.

1. People will accept offers with really low escrow or good faith deposits. There are plenty of people who can afford to walk away from a $1,000-  if they really want to but not many will walk away from $5,000-. Having said that I often write offers with a low escrow deposit and I’m surprised how seldom the seller counters.

2. Don’t seller’s look at their buyers ability to buy their home ? If a buyer makes you an offer with no money down and wants you to pay closing costs isn’t that a weak offer ? As opposed to cash for 30% down for example.

3. Pre approved. You know that doesn’t mean the buyer is 100%  guaranteed to get a loan right ? In some cases this just means a lender asks some questions about their finances. A seller might want to ask if the lender looked at bank statements, tax returns ect. It is the underwriters who approve loans not the banker or mortgage person who initially interviews the buyer. Underwriters are extremely tough these days and do not rubber stamp loans !

4. Some lenders are notorious for not closing on time. This can be a big problem if you are trying to sell one house and buy another at the same time.

These are just a few thoughts about selling your house. They are all things an experienced Realtor should be bringing up before you get an offer.

Why you should always do your own inspection

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My buyer found a house they liked and it seemed odd that the seller had only lived there a month or so. Apparently she regretted her purchase and wanted to go back home. After accepting my buyers offer the seller’s agent offered my buyers the inspection that the seller had just had done several weeks ago. I cautioned about using an existing inspection. Sure enough one of the inspectors I like found several problems that the first inspector missed. Pretty obvious things like leaky faucets, a frozen valve on the hot water heater. Nothing serious but the seller was required to make those repairs under the Florida real estate contract that we used. All things the previous seller should have repaired.

Another time my buyer walked away from a deal because the AC was shot. We knew it was old and had an AC tech do an inspection in addition to the home inspection. Someone had rigged the AC so it wouldn’t blow out freon ! The listing agent gave my buyers inspection to the next buyer never knowing the results of the independent AC inspection.

So there you go. Never trust an inspection that you didn’t order and pay for.

Some things just don’t exist

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I deal mostly with out of state buyers. Sometimes people are looking for things that either don’t exist or are extremely rare.

Pool homes in 55+ communities are a good example. There are some but 99% of 55+ homes don’t have a private pool. Why have a pool to maintain when you are paying HOA fees for a community pool ?

Same goes for “I want a 55+ home on a huge lot with no or very low HOA fees” Retirement homes are on small lots because most people don’t want yard work anymore. Retirement communities are also about a lifestyle and not just age restrictions.

Yet another home type I get asked about all the time are farms under $100,000-. I guess if an old mobile home on an acre with Ag zoning is your idea of a farm then they do exist. We have some inexpensive homes here on standard sized lots but farms are not that cheap.

I think people get an image in their mind of their ideal home before knowing an area and what to expect. I see my job as being just as much about educating buyers as just showing them houses.