Sink Hole Swallows Man as he Sleeps

Did you see the TV coverage of a wrecking crew demolishing the Tampa home of a man who was killed when his bedroom was swallowed up by a sinkhole while he slept? What a way to go. One second you are asleep, the next the bedroom falls 30 feet into the ground and the sand slides down over you. The scene was so surreal that the officials decided not to even try to recover the body.

Usually you don't see sinkholes in the headlines, but the risk of sinkholes is common in Florida due to the state's porous geological bedrock. Usually a parking lot suddenly has a crater in it or the floor of a house or garage cracks--and that's it.  But in truth, many of the lakes in Florida are relic sinkholes which are classified as geologic hazards sometimes causing extensive damage to structures and roads and resulting in costly repairs. Sinkholes can also threaten water supplies by draining unfiltered water from streams, lakes and wetlands directly into the aquifer (underground water supply).

Florida's Association of Realtors offers a disclosure form for members to use (on line) that invites a seller to “disclose” any knowledge of sinkholes, including land movement or settling. And the form goes on to ask if a sinkhole did occur, was there any insurance paid to mitigate the problem—and if so, was the insurance money spent on that repair (I suspect they want to be sure the seller didn't take a trip to Hawaii with the proceeds). But if you suspect ground settling, you can ask your insurance provider, they have all the latest maps.

Sinkholes are an ongoing concern for Florida residents and lawmakers. Sen. Jack Latvala,R-Clearwater, identified sinkholes as one of the primary factors in property insurance costs in the state.
"In our area, we have a substantial problem with sinkholes," Latvala said of trying to get a grip on property insurance costs that have led to an increase in premiums.

From 2006 to 2010 the number of sinkhole claims in Florida tripled, costing insurers a total $1.4 billion over the period, according to the Florida Office of Insurance Regulation. In response to insurers’ assertions that many claims were fraudulent and burdensome to the industry, the Florida legislature passed a new law limiting sinkhole coverage in 2011. The change has made it hard for Florida homeowners to get meaningful sinkhole coverage.

Despite the reduction in coverage, sinkhole insurance premiums have increased—for example, the rate for sinkhole coverage this year rose almost 25% at Citizens Property Insurance, Florida’s largest property insurer. The number of sinkhole claims received by Citizens already had decreased by 30.4 percent in 2012.
Most sinkholes in Florida are found north and east of Tampa Bay, but sinkholes can and do pop up elsewhere in the state, including the Suncoast and Southeast Florida. Maps of sinkhole activity are easily found on the internet. These maps offer a clue as to why certain regions in the state -- like Hillsborough County -- are most susceptible to sinkholes. Most of Southern Florida is at low risk for sinkholes and those that form in the region are shallow and form gradually.

Sinkholes can range widely in size, but all are a result of the dissolving of the underlying limestone. As rainwater filters down into the ground, it dissolves the rock, causing erosion that can lead to underground caverns, which cause sinkholes when they collapse.. Too much or too little rainfall can contribute to sinkhole formation, as can human activities like pumping out water from the aquifer and building construction.

Dane Hahn is a real estate professional serving Sarasota and Charlotte counties. 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

Prudential to become Berkshire Hathaway

When you think about real estate, you probably thinkof those firms whose names you know, like Century 21, and Coldwell Banker and Re/Max, that's because they spend more money promoting themselves and their brand name than almost any of the independents do. And yet 41 percent of Realtors are not affiliated with these “big brands”, but instead work with an independent agency. Some of the agents prefer the independents because as a rule they are smaller, sometimes “mom and pop” shops, and because they normally don't charge the fees and expenses that the franchises do.

The Great Recession brought hard times to all the agencies, the difficult market conditions, including high unemployment, restrictive lending, and a long-suffering economy, forced many brokerages into scaling back offices and agents. Re/Max, for one, has seen a net loss of 700 offices in the past two years. As a matter of fact, most national franchise brands have been contracting in response to lackluster real estate market conditions--one notable exception is Keller Williams, which has continued to see a net growth in agents and numbers of offices.

This week the new Berkshire Hathaway Home Services brand was unveiled by HSF Associates at the annual Prudential Real Estate Sales Convention, signaling another defining moment in residential real estate. Warren Buffett wasn't there, but from the stage of Caesars Palace in Las Vegas, Prudential real estate agents and brokers got a first-hand look at the brand’s new visual identity, soon enough you'll see Berkshire Hathaway on every Main Street across the US. Late last year, they purchased a majority interest in the affiliate networks of Prudential Real Estate, and had formed HSF Affiliates LLC, which will operate the existing franchise network, and presumably introduce the Berkshire Hathaway name change.

Do you think the franchises are smallish business? Think again, franchises are big business, and they bring a “national brand” awareness to even the smallest real estate firms. But more than just a familiar brand, they are providing a renewed focus on agent productivity, retention and training. Indeed, today’s market challenges are giving many franchises an edge in their recruiting and inspiring others to forge new partnerships as they look to chart a stable future.

Last year ERA Real Estate announced its affiliation with New Orleans–based Latter & Blum. L&B retains its identity as a strong local brand established 95 years ago but now has access to ERA’s resources and national network through a new program called ERA Powered.

In another notable strategic pairing, the fast-growing Casa Latino franchise, which specializes in the Hispanic market, announced that it would become part of Nextage Realty International. Although the new company will still serve its targeted multicultural clients, the move is designed to give franchisees broader growth opportunities.

And even private mom and pop brokerages that desire to stay independent are joining large networks of affiliated companies like the Chicago-based Leading Real Estate Cos. of the World. In that kind of arrangement, they can obtain many of the same benefits that brokers and salespeople at franchises have. These can include everything from lead generation programs, branding, and marketing materials to blogging platforms, training, and professional development opportunities. Leading RE’s 580 companies together were responsible for $225 billion in sales last year, a higher volume than any single national franchise brand.

Smaller franchise companies like Flat Rate Realty, which has 50 agents operating in 17 offices, differentiate themselves with incentives like buyer’s rebates. These rebates can be worth as much as 50 percent of the buyer agent’s commissions--which have increased business by 25 percent over the past two years.

As a long time Realtor, I have worked for both Indies and Franchises—both have their high points and their low points. I can tell you the franchises generally provide a management framework for the owners. For the agents they offer leads (from their other franchisees), sales training, advertising and signage, and high tech websites and texts. What they offer the owners is financial tracking, agent retention and management discipline. The franchises monitor the business, keep track of the agents and frown on wasting time. Whereas the mom and pop shops are usually less restrictive and more understanding of a day off to go fishing...

Dane Hahn is a real estate professional serving Sarasota and Charlotte Counties. He can be reached at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com.

New Vision for Housing Policy

This week a bipartisan commission of leading housing and economic experts unveiled a new vision for housing policy. If adopted, the plan will be to further our nation’s economic recovery and improve the lives of millions of Americans—then again, right now it’s only a plan. Six years after the collapse of the housing market, the underlying problems in housing remain, and government solutions continue to be elusive.  The commission hopes their “vision” will serve as a catalyst for action.

The recommendations propose scaling back the government role in the nation’s housing finance system and reforming housing assistance programs to better meet the needs of America’s most vulnerable households.

The report proposes a new housing finance system that calls for a far greater role for the private sector, a continued but limited role for the federal government, the elimination of Fannie Mae and Freddie Mac, and reform of the Federal Housing Administration to improve efficiency and avoid crowd-out of private capital.

Through these reforms, the plan addresses the broken mortgage finance system while creating a path to a stable and strong housing market designed to provide greater taxpayer protection and support a more vibrant economy.

At the core of this plan are the perceived needs that have gone unfilled. As demonstrated in the recent presidential election, profound demographic changes are transforming the country and our housing needs. The increasing diversity of the American population and it’s intrinsic economic issues, the aging of the Baby Boomers, and the formation of new households by millions of young Echo Boomers striking out on their own, all present new challenges.

The plan presented this week calls for reforms that would establish a new performance-based system for delivering federal rental assistance with greater devolution of responsibilities to state and local providers. The commission also proposes to shift existing resources to assist the poorest households, and to expand the Low Income Housing Tax Credit program to increase the supply of affordable rental housing.

For first-time home buyers, the report emphasizes the importance of housing counseling as a means of preparing for homeownership. The commission feels that “government knows best” and so offers recommendations for the young as well as proposals to enable seniors to “age in place” safely and affordably while integrating housing with health care and other programs. For the one-third of Americans who live in rural areas, the commission recommends continued support for homeownership and rental assistance in those communities.

To read the full report of the Bipartisan Policy Center’s Housing Commission, please visit http://bipartisanpolicy.org/library/report/housing-future.

Dane Hahn is a real estate professional serving clients in Charlotte and Sarasota Counties. He can be reached at dane.hahn@gmail.com or by phone at 941-681-0312, or on the web at www.danesellsflorida.com

This House Stinks

There’s really nothing less inviting than going into a home and finding a really gross aroma.  Last week I took a youngish couple through several homes that were bank-owned, and with all due respect to the cat owners out there, they smelled of cat urine—which as you probably know is about 100% ammonia.  The smell was so strong it actually hurt your sinuses. I’d like to say Fabrize to the rescue, but I don’t know if even that would make much of a difference.

Back in the old days people didn’t keep cats in the house—for exactly that reason.  Cats lived in the barn and had a job.  They kept the population of mice and rats to a minimum.  They were fuzzy and didn’t need much food, and frankly they found a place to make their smells that was acceptable to all, so long as there weren’t any rodents around.

About the mid part of the last century, kitty litter replaced sand as the potty of choice for cats and cat lovers. And with that invention, having a “house cat” became much more acceptable, as the “litter” curtailed the aroma, and so the population of cats skyrocketed.  Thus giving the American family a second choice in the home pet department.  Fido began to lose his standing as Fluffy grew in popularity.

But in a slow real estate market, when money is scarce, kitty litter can be one more expense that just can’t be met. And after a family or tenant moves away and takes their possessions with them, sometimes the cat stays on in the old house—and that’s a real issue.  Recently a study was done on aromas, and it seems that some aromas can have a direct impact on people's tendencies to spend. Of 402 people browsing in a home-decor store in Switzerland over a nearly 20-day period, when an aroma consisting simply of orange filled the store, shoppers spent 31.8 percent more. But add scents like green tea, basil, and complex blends of orange and the shopping spree decreased.  (Obviously they didn’t try the cat stink, but the results are interesting.)

The study makes the argument that fragrances may affect cognitive functions in the same areas of the brain that are responsible for decision-making.  And that while complex scents may be pleasant, they can still be a distraction. It seems they have an effect on some people that causes them to subconsciously spend time trying to identify the aroma.

Smells that are subtle go, more or less, unnoticed. So people don't actually concentrate on what they smell. They don't ask their significant other, "Can you smell that?" Whether it's in a store or a home for sale, some aromas are distracting—just as other influences can interrupt a train of thought.

This principle applies to many things in and around a home that's listed for sale. For instance, if you have lots of personal pictures displayed, it's likely they will distract potential buyers. They'll get a little curious and start exploring your photos and commenting on them to the agent or whoever they are with while viewing your home.

Yet another no-no is to have many medications out cluttering the bathroom--or even in your prescription cabinet. Like the home's aroma and the photos on your counter, this can be a distraction. When buyers pass through a home, they open closets, cabinets, and sometimes-even drawers. It's what they're supposed to do. They're thinking of putting their own "stuff" where your stuff currently is. So they need to check out all the spaces available. Any distraction will interrupt their decision making regarding the home, so it’s a good idea not to have personal items out and around.

The best policy when preparing a home for sale, is to stage it as if you don't live in it. Give your home the “look” of a model home. Of course you can’t bring in all new furniture for the period of time the house will be for sale, but you can rid the rooms of personal items, make the whole house smell good, and clean the finger prints and smudges off the woodwork and the appliances. Tone down the scent--especially of pets. And find a way to clear the clutter, because it may mean a faster sale of your home and for more money.

Dane Hahn is a real estate professional serving Charlotte and Sarasota Counties in Florida. Call him at 941-681-0312, or email at dane.hahn@gmail.com.  See him on the web at www.danesellsflorida.com

Investing in A Home

Buying a home is usually the largest expenditure (or shall we call it an investment) any of us ever makes.  Spending that kind of money almost always comes with second thoughts, particularly if it’s your first home. And there are some hazards of home buying that are totally unavoidable. I always try to help buyers with their concerns. I would guess that the average agent holds the hand of a buyer maybe hundreds of times throughout their career.

You may have heard the term “Buyer’s Remorse”.  I like to tell both buyers and sellers that they may experience remorse once their “deal” is written and the offer is made and accepted.  And yes there is “Seller’s Remorse” too, but the truth is, both parties will probably spend that evening riddled with remorse: the buyers think the accepted offer means they could have gotten the place for less, and the sellers think it means they could have demanded more!

Even after showing the homes that I think will work best for my clients, they still sometimes are attracted by some glitter seen in a water front home or a golf course property, and later rue the day they closed on that particular home, maybe for years and years to come. I had a buyer once who saw a worn out waterfront home with a barn and paddock—after he saw it, he could not focus on anything else.  He had to have it, even though the home was not functional for his family. Apparently it represented all the things he had always wanted to show off. Unfortunately the purchase price plus the repairs caused him to over extend himself financially and he ended up in mortgage distress.

Clearly, the decision-as to what house makes the most sense for a family is the buyer’s.  But as an agent I can and do make suggestions—and sometimes even argue. Probably the most important suggestion I ever make is that the buyers hire a home inspector. House condition surprises are only avoidable if you have inspections. And while the inspector may find many things to report to the buyer, the idea is that sooner or later the homebuyer would find these things out for himself, so before he buys is a better time than after.

When I am trying to find the perfect home for a client, I have long used a visualization exercise. I like to ask them to close their eyes and tell me what the perfect house would be. And to tell me what their favorite rooms were in the homes or apartments they have lived in. Sometimes I try to get their minds’ eye on topics like how long will the family likely live in the new home.  Or what is important to them in terms of neighborhoods and schools? Do they want to walk to shopping. What sorts of things are appealing to the family, both inside and outside of the home, for work, school, play and their downtime. County water and sewer may or may not be available. How close are they to retirement? (These points seem personal, but so is a home, and more to the point, what home amenities they will need). Naturally I ask about the desired number of beds, baths, square feet desired in the next home. 

American clients don’t have a good feel for the size of a home expressed in square feet.  They are more from the school of, “I’ll know it when I see it.”  Whereas, Canadians and European buyers seem to know exactly how big a home they want and can quote you the exact number of square feet, “I want a home that is 1800 square feet,” they’ll say.

Some buyers fail or choose not to read disclosures, inspections, loan documents and such. These are the buyers who tend to end up really, really upset at a later stage of the deal. Some buyers are so unused to these sorts of transactions that the mere sight of all those papers and zeros makes their eyes glaze over. Other times, there are buyers who have done so many major transactions in their work or their lives that they’ve gotten casual, with the details.

I try to summarize the documents which I know are important and encourage them to ask questions. The prospect of trying to read and catch mistakes in a pile of docs at the closing table can be daunting.  When the closing is hanging in the balance and all the excitement and expectations of the family—and maybe the moving truck is parked just outside--is one of the most common reasons buyers cite for not reading and understanding their papers.

I’ve had buyers proudly arrive at the closing in a brand new car, and then be told (by phone) by their lender that since they bought a new car their credit no longer qualifies them for the mortgage. I always tell my buyers not to make any expenditures (no new furniture, no new cars or boats) until AFTER athe closing.

Some of my best buyers have early on disregarded my advice, only to lose a house to another buyer or a mortgage to a dumb financial move. But then, once they see that good advice and timing will help them, these are the folks who can turn out to be my best clients, especially when the market has proven me right!

Dane Hahn is a real estate professional serving Sarasota and Charlotte counties. You can reach him at 941-681-0312 or via email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com.

It's a Seller's Market!

As I write this, I am surrounded with this week’s newspaper real estate sections. The headlines call out the fact that home sales are up, home prices are up, and home inventories are down.  Why just this morning I showed a home to some buyers who early in the week had found 5 homes they wanted to see, but by this morning, two of the five were under agreement and so not able to be seen. Property is moving again!

Buyers are discovering, to their dismay that homes they wanted to see or possibly buy have already been snatched up before they even get a chance to see or make an offer on the property.  Our area’s unprecedented low inventory levels are slowly driving up home prices and making sellers reluctant to cede little if any concessions to buyers.

There’s no better gauge of the onset of a seller’s market than the demise of concessions that were once considered essential to attract buyer interest just a few months ago.  But with inventories down and prices up, sellers are ending the costly incentives they have been forced to offer buyers during the six-year long buyers’ market. The market has steadily moved towards a seller’s market with buyers more willing to bear closing costs, in some cases paying for half or more of the closing costs. Tight inventories of homes for sale are making markets increasingly competitive.

Last year sales were so slow that 60 percent of all sellers offered an incentive of some kind to attract buyers. The most popular was a free home warranty policy, which costs about $500, according to NAR this was offered by 22 percent of sellers, but 17 percent upped the ante by paying a portion of buyers’ closing costs and 7 percent contributed to remodeling or repairs.

Concessions linger where inventories are still adequate and sales slow, but in tight markets the times when buyers can expect concessions are already over.  And where the supply is dwindling and sales are moving to a more balanced market, buyers can expect sellers to offer even fewer concessions and sales prices will be close to list price.

Not only are most concessions a thing of the past, but also some desperate buyers are even resorting to writing “love letters” to win over sellers in competitive situations. When buyers know they are in a competitive market and there will likely be multiple offers, it makes sense to write a letter introducing themselves to the seller and explaining why they liked (and wanted to buy) the home so much.  The idea here is to get the seller to choose the letter-writer’s offer from the multiple offers they have to sort through.
New regulations enacted last year by the Federal Housing Administration to limit its exposure to risk forced many sellers to cut back on the amount of assistance on buyers’ closing costs. Sellers are now limited to no more than six percent of the loan amount at 90 percent loan-to-value or lower, and then usually 3 percent for 90 to 100 percent loan-to-value.

Some sellers bump up the home sales price to pay for concessions. But when this happens, and the buyer is getting a mortgage, then he will need to borrow the increased amount, (and he will need the property to appraise for the higher amount). So it will make sense to focus on concessions that will actually increase the value of the home, because the buyer will have to meet increased debt-to-income ratio in order to close his loan.

Making concessions or simply lowering the price are both powerful incentives to attract a buyer.  As the market ebbs and flows, sometimes it’s a buyers market and sometimes a sellers market, but the recent limiting of concessions will make buying and selling a little simpler and more rational for all parties. From my standpoint it will make writing a contract a little simpler. As one observed asked, “In this market, why would anyone selling a home pay the buyer to buy it?”

Dane Hahn is a real estate professional.  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

Sellers, It's Your Front Door!

The real estate market is coming back—over the last week or so I have probably been in and out of 25 homes with several groups of buyers, and I must say, today’s sellers are neither very tidy nor all that conscious of the “first impression” that we all talk about. 

You don’t get a second chance to make a “first impression”. Some homes make a very poor first impression. These are homes with a very uninviting front door, or homes where you had to skirt the gas meter or sidle around garbage cans to get into the home. In one case a house where there was such a bewildering array of doors, you weren't sure which one to knock at.

Picture yourself as my customer, at the front door, while I am getting the door unlocked. My clients are noticing the door paint is peeling or the lockset hardware is rusty, or worse, it’s loose. The front entrance is seldom high on a seller's remodeling priority, yet, just like that old saw about first impressions, it's the home's entrance that people notice first. It's practically impossible to rectify a bad impression made at the front door.

Customers actually say, “I hope it’s nicer inside than this.”  Or, “looks like they didn’t take care of this one.”

Newer homes built by tract homebuilders usually have more money and energy spent on the front door than elsewhere in the home. Because builders who know their buyers care about first impression--even in the cheapest house--they rarely cut corners on the front door. They know that a strong impression of quality here subtly colors a visitor's perception of the whole house.

For hundreds of years colonists, architects and builders have spent time on their front entrances, which are a focal point of a home's design. In colonial New England, for example, the front door was often flanked by sidelights and topped by a pediment, setting it apart from an otherwise austere facade.

Certain design elements are hard to adjust, for example, a narrow lot does not lend itself to a garage opening to the side, so the “snorkel-house” (the one with the garage sticking out toward the street) has become popular in Florida, but really, the entrance should also be clearly apparent from the street. That doesn't mean it has to be glaringly exposed to view just that an unfamiliar passerby should easily deduce its location. Architects call this principle "demarcation."

There are lots of subtle ways to demarcate a front entrance. The most common is to surround the door with an architectural form such as a pediment or other type of trim. Another traditional strategy places the door in a recess, on a projection, or under a roofed porch. You can find a well-known example of the latter on the back of a $20 bill.

If you’re selling, here are some thoughts for your own grand entrance:

• Stand on you own entry porch area and look around with special emphasis on the door.  A quart or two of paint can correct a world of hurt from the front door. Don't be afraid to invest in a new door lockset hardware, there’s a lot to say about new shiny doorknob and key locks.

• Trim back any natural vegetation that might be overgrowing the entry. And if you must bring the path to the front door past utilities such as gas or electric meters, or past unsightly storage areas for trash or the like, consider a couple of sheets of plastic fence or lattice installed to hide the utilities. Keep these kinds of features out of the buyer's line of sight.

• If you have a covered entrance porch, be sure it’s clean and free of mud wasps, spider webs and any general mess.  A pressure wash will correct most of this, but even a garden hose and a broom will do the job.

• Lastly, if your house has several doors facing the street, make sure your front approach directs your visitors toward the main entrance. Do this with welcoming geranium flowerpots—or similar--or even a small welcome flag. Your front door may seem obvious to you, but, hey, you live there.

Dane Hahn is a real estate professional serving Charlotte and Sarasota Counties in Florida, 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