Flood Insurance

Monthly flood insurance premiums for more than 1 million homeowners are set to increase this week due to a rewrite by the U.S. Congress last year of the federal flood insurance program. As a result, home prices in flood zones around the country are being affected as potential buyers balk at the cost of premiums. Flood insurance is required by lenders when they give a mortgage in a FEMA designated flood zone. So the option of not buying flood insurance is only there for cash buyers who are willing to risk a flood. Federal flood insurance covers $1.3 trillion of property in all 50 states, with Florida, Texas, Louisiana, California and New Jersey making up two-thirds of all policies, according to Federal Emergency Management Agency, FEMA which runs the program. Federal subsidies have kept rates as low as 10 percent of the actual cost, but now all that is changing. Under the law, those who bought homes after July 2012 became ineligible for subsidies after Oct. 1. The flood insurance program amassed more than $20 billion in debt after Hurricane Katrina slammed into New Orleans in 2005 and it borrowed more after superstorm Sandy hit the East Coast in 2012. Owners of vacation homes began to lose federal subsidies in January, with annual rate increases of 25 percent until reaching full price. After Oct. 1, subsidies for businesses and primary homes began being phased out. FEMA is reassessing its risk calculations, drawing new flood maps that will bring higher rates to some areas. Those who buy homes in flood zones or sign up for new policies won’t be eligible for subsidies. The new flood insurance law was designed to reduce the National Flood Insurance Program’s growing debt. The measure, called the Biggert-Waters Flood Insurance Reform Act of 2012, phases in rate increases for the 20 percent of policyholders who have been receiving federal subsidies on premiums. The new law was written by Maxine Waters, a California Democrat, and Judy Biggert, an Illinois Republican, (who lost her November re-election). Waters, said she never expected the bill she sponsored to cause large rate increases. Florida is home to 37 percent of the nation’s 5.6 million flood policies, and is now trying to attract private companies to write flood policies and are considering starting a state-based flood insurance pool, rather than the FEMA policies. Florida policyholders have paid $16 billion into the federal program over the last 35 years. Various measures have been offered to stop or delay the rate increases. Louisiana is preparing to sue. Massachusetts Attorney General Martha Coakley proposed legislation this month to cap the amount of insurance lenders can require. Bills pending in the U.S. House and Senate to delay rate increases have bipartisan support, mostly from lawmakers in coastal states. On the other side are those who advocate market-based policies, who have urged members of Congress to leave the measure in place. Would-be homebuyers up and down the barrier islands and within a few miles of the Gulf oif Mexico, are walking away from contracts when they see the insurance costs, and some Realtors are using the “fear of flood insurance” as a marketing tool for homes that don’t lie in flood zones advertising, “No flood insurance required!” Dane Hahn is a real estate professional with Venice-based Sarasota Realty Associates. He can be reached at dane.hahn@gmail.com or by phone at 941-681-0312. See him on the web at www.danesellsflorida.com

Florida Home Owner Association regs.

This year, a bill was passed and signed into law that makes several changes to homeowners’ association (HOA) governance, including the requirement for the Department to create a website where HOAs and Community Association Managers (CAMs) are now required to register. The deadline for registration was November 22nd, and as of the deadline there were 12,723 associations representing 2,563,801 parcels meet the registration requirement. It’s important to note that although the initial registration deadline has passed, HOAs will continue to have an opportunity and obligation to register. DBPR will maintain the HOA registration website and provide an annual report to the Governor and Legislature each year until 2016. Home Owner Associations that have not registered, must do so to ensure you are in compliance with the law. To register, please visit www.myfloridalicense.com/hoa. If you have any questions throughout the one-time registration process, please do not hesitate to contact the Department at 800.226.9101. To register your Homeowners’ Association, you must create an online account. Once your account has been created, you will receive an e-mail with a temporary password; you may then create your own unique, secure password. Check your Junk Mail or SPAM folder for this e-mail if you do not receive your temporary password after a short amount of time. You can creat an account on line at www.myfloridalicense.com/hoa Create Your Online Account by going to the myfloridalicense site, or use: https://www.myfloridalicense.com/datamart/loginFLDBPR.do;jsessionid=0480CD7A080BE242DF3D3903368363C9.vo_fldbprm NOTICE: THIS IS FOR HOA’S ONLY. Please do not register a Condominium Association subject to Chapter 718, FS, do not register a Cooperative association subject to Chapter 719, FS, do not register a Timeshare Association subject to Chapter 721, FS nor a Mobile Home Park subject to Chapter 723, FS. Click here to register your Homeowners’ Association If you have questions or need assistance with completing the registration form, please call the Customer Contact Center at 850.488.1122 or use this convenient contact form. Chapter 2013-218, Laws of Florida, amended Chapter 720, Florida Statutes, to require homeowners’ associations, which meet the definition of section 720.301(9), Florida Statutes, to register with the Division by November 22, 2013. Homeowners’ associations that are required to register with the Division must be a Florida corporation responsible for the operation of a community or a mobile home subdivision in which: · the voting membership is made up of parcel owners · and membership is a mandatory condition of parcel ownership, · and in which the association is authorized to impose assessments that, if unpaid, may become a lien on the parcel. The term “homeowners’ association” does not include a community development district (CDD) or other similar special taxing district created pursuant to statute. Reporting requirements: · Legal Name of homeowners’ association · Federal employer identification number · Mailing and physical addresses · Total number of parcels · Total amount of revenues and expenses from the association’s annual budget For associations in which control of the association has not been transitioned to non-developer members, the following information must also be reported: · Legal Name of developer · Mailing address · Total number of parcels owned on the date of reporting If you are a Community Association Manager filing on behalf of the association, please provide your License Number. Dane Hahn is a real estate professional affiliatgged with Sarasota Realty Associates in Venice, FL. You can reach him at 941-681-0312, or by email at dane.hahn@gmail.com See him on the web at: www.danesellsflorida.com

Want to Buy a Business, Ask Your Wife

A couple of weeks ago I received an email from a friend who is transitioning out of the Coast Guard after a 4-year career as a senior cook. He has been in charge of the Galley at Portsmouth, New Hampshire Station for the last three years and has done a remarkable job there.

The Coasties actually like the food he makes, and according to the Sr. Chief, anyone who can eliminate complaints around the station is a big help. My friend's reason for sending me the email is that he is evaluating his future, and has found a bed and breakfast for sale on the oceanfront in Maine. He is considering the purchase of the place as the next chapter in his life—which amounts to about 27 years so far. He has a wife and three small children, and presently lives off base, so he is used to paying rent and having the family around him when he’s not at the station.

At the station he has an assistant chef (FS-3), and some enlisted folks who help out in the scullery and maintenance of the Mess Deck. He is responsible for developing menus, buying the produce and ordering the food stocks. He also schedules the work week so that either he or the assistant will be there for all 21 meals a week. Generally their hours are from 6AM to 6PM, and they divide the work with some overlaps.

As a Realtor and a friend, he asked my opinion as to whether buying the bed and breakfast was a good idea—and of course I was happy to throw in my 2 cents. What follows is a part of my reply: …you have obviously done your homework on how the business plan would work. My suspicion is you would be the "breakfast" guy, and the family would all pitch in regarding the "bed" portion of the equation. If you decide to move forward with this project, your next few years will be the stuff of a novel, so take notes. But even if you have ruled it out, no doubt your entrepreneurial spirit will rise to the top like cream in skim milk and another opportunity will find you.

Oddly, when the time is right, and you are listening to hear opportunity knock, OMG, there it is! I wanted as a friend to give you the best kind of advice I got from a very high priced lawyer who I engaged to keep me out of trouble. I approached him with a business plan and asked him to look it over for any weaknesses that I might have missed. He asked me, "are you going to do this?" and I said, "I want your opinion, is this something that seems like a good idea to you?" He said his opinion was his opinion and it was based on his life, his age, his resources and his willingness to take risks.

And he said that he couldn't help me one way or the other until I had decided what I was going to do. His role was not to decide what I would be good at, but rather to limit my risk once I had made my decision. I was not happy with the answer, but over time I have come to see he was right.

So I wrote to my friend, that if you're going forward, go with 100% of your energy and brainpower. Be careful not to have one foot in the boat and one foot on the dock. If you are half-hearted about this, you will fail. I know family is important to you, as it always was to me, which means your wife needs to be equally committed. A commitment of this sort is going to mean you will have time for the family around the building and you might get out to some of the kids T-ball games or scouts but you'll have little time for vacations and travel.

If you're good with that, just know that's what to expect. And finally, I told him my wife and I may need a place to stay when we are "up north”, so let me know what happens, if he moves forward, I’ll post his address. Dane Hahn is a real estate professional with Sarasota Realty Associates in Venice, FL. You can reach him at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com

Credit Score

All the time I hear people talk about their credit score. And everyone who is hoping to buy a house seems to have found a way to unearth the three-digit number that they claim is “their score”. I say I am always skeptical of the numbers they offer up—because one set of credit score numbers from one source can be different from the numbers from another source—for the same person. Credit score numbers are based on formulae and algorithms, and in my mind are based on five parts history and five parts of sorcery. This seemingly harmless number is strongly tied to the amount you can borrow. It influences the terms you will be offered. In order to stay on top of your finances, it is crucial for an individual to thoroughly understand credit scoring in order to make well-informed decisions. There are three main credit bureaus, Equifax, Trans Union and Experian. While each credit bureau uses a different method for calculating your credit score, individuals with a long history of paying their debts on time, using the appropriate types of credit and not exceeding their available credit lines are most likely to have a good credit score. The higher your credit score, the higher are your chances of securing a loan with desirable terms. Put yourself in the position of a lender, if you were considering lending money to someone you didn’t know, wouldn’t you would want to try to figure your chances of getting your money back, with interest, and on time? If you had Tony Soprano to help you collect the debt, maybe you wouldn’t mind a higher risk, but for a mortgage for a home—banks and other lenders live with your credit score as created by one or more of the three main credit bureaus. Since payment history is a clear reflection of an individual's likelihood of defaulting on financial obligations, your credit history is the biggest contributor in a credit score calculation. As the highest contributor to your score, individuals with a habit of paying bills late are most likely to suffer. Payment history is about 35% of your credit score. The next biggest contributor to your credit score is credit utilization, sometimes called outstanding debt. If your debts are close to your credit limit, your score will take a steep decline. Similarly, if you have outstanding balance on several accounts—let’s say several credit cards—expect that to count against you. Outstanding debt makes up 30% of your score. The next most crucial aspect of your credit score is the length of credit history. They say old credit is the best credit. This is indeed true because the longer your accounts are open, the better it is for your score. Credit history has a 15% contribution to the credit score. Your debts are your friends only if they are well managed. It’s better if they have been in place for years. Clients who always pay cash for everything—thinking that having no debt is better for their credit score--are often advised to borrow some money from a well-known bank. They should take a personal loan (which is generally a short term loan and unsecured) or an auto loan (if they already have a car that’s all paid for, consider refinancing the car). Accepting debt will demonstrate your willingness and ability to handle these loans, as long as you make your payments on time and in full. The last 20% of your credit score is partly based on the kind of debt you have, the more debt and the more appropriate the types of credit you have (and can manage in a timely manner), the better. Finance company accounts, retail accounts, instalment loans, and credit cards accounts are the ideal mix of accounts. And your recent activity rounds out the report. Meaning that if three or four loan companies have recently “pulled your credit”, this will lower your score. If you decide you want a mortgage, before you get started, spend some time with a lender and discuss your credit. Then, when you apply for a mortgage, you will actually have some credit, and they will see that you are someone able to manage debt. Dane Hahn is a real estate professional affiliated with Sarasota Realty Associates in Venice--serving both Sarasota and Charlotte Counties. You can reach him at dane.hahn@gamil.com or by phone at 941-681-0312. See him on the web at www.danesellsflorida.com

Homes Always Cost More

This is the season for giving thanks, and I think I can speak for all Realtors—nation-wide, this has been a year that we are thankful for. Home sales started up again, and the foreclosures and short sales are fewer and fewer. That’s really good for our communities, as even vacant homes get back on the tax roles and new owners take pride in their new house.

On my street there are an even half dozen homes that have new owners, and everyday there are contractors trucks in their driveways. New roofs, new pools, new kitchens and baths seem to be the main expenses, but these “additions” to the cost of the home brings employment to the contractors and their staffs, brings furniture sales, brings new appliance sales and—helps everyone.

The new homeowners are like the Freshman Class, in they come and they don’t know anybody—so they have a need to meet the neighbors, to take their place in the society, and to establish themselves. They will stick together because they all moved in the same year, and they will reach out to the rest of us for the names of contractors, doctors and dentists and where the best restaurants are.

The data is a little sketchy, but it seems like the first year expenses of owning a new (or different) home run around 15% of the selling price. Meaning that the buyer of a $200K home will be spending something on the order of $30,000 in general fix-up and re-dos, just the first year. And next year should be as good or better, just look at the headlines: Air Canada will be serving Sarasota with non-stop flights. Which is all the better for us Realtors, since Canadians love our climate and come here with cash (no US mortgages for non-citizens).

It’s time for a creative real estate agency to install a kiosk at the airport and capture the buyers as they arrive in town. Maybe the best idea would be for agents to offer free orange juice and a printout of the newest listings for sale in the area of your dreams. Another headline indicates home selling prices are climbing a bit. I can never tell which side the writer is taking until I get into that story. On the one hand, increases in price are good for the seller, and for the taxman. Of course there is the concern that with increases in cost, houses will no longer be affordable, and so perfectly nice people will be priced out of the market--but in truth if a seller wants to sell, he’ll drop the price until a buyer is found.

Meaning that affordability is a function of what the buyer will pay. And so it is that most of us remember to say thanks—remember to give thanks at Thanksgiving, only once a year. But in fact, buyers and sellers (and Realtors) have much to give thanks for. Both Sarasota and Charlotte Counties have wonderful infrastructure, including not just good roads but schools, libraries, hospitals, shopping, sporting arenas and entertainment venues. All of this costs us tax money—but it makes the quality of life, and therefore the appeal to live here all the better.

Dane Hahn is a real estate professional affiliated with Sarasota Associates in Venice, serving Sarasota and Charlotte Counties. You can contact him at 941-681-0312, or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com