Monday, March 10, 2008

The Outer Banks makes the WSJ...Again

I hate to stay on the real estate tinge here, but this just came out. Good if you are looking to buy, if you already own, then just keep enjoying life on the Outer Banks.

Daily Real Estate News | March 10, 2008
Bargain Hunters Target Vacation Hotspots

Bargain hunters are sniffing out the best deals in parts of the country where the underlying economics are good but prices have fallen or look like they could fall from their height in 2005.

The most popular hunting grounds are those areas where there are lots of second homes, including Sante Fe, N.M., the Outer Banks of North Carolina, Cape Cod and Nantucket-Martha’s Vineyard in Massachusetts, and California’s Napa Valley. Prices in these areas actually haven’t fallen much, but the abundance of inventory on the market suggests that sellers may have to concede and cut prices if they want to sell soon.

In Miami and Las Vegas, where the problems stem from over building, prices are about 64 percent higher than they were in December 2002 when the run up began in earnest, according to Radar Logic. In Los Angeles, where tighter lending after the subprime mess has made getting financing difficult for some buyers, prices are 57 percent ahead.

At the height of the real estate boom, an investor could flip a house at a profit in as little as three months in many areas. Now the odds are stacked against a quick turnaround, experts say, and buyers should plan to hold onto properties for at least three to five years.

"I think to be an investor like this you've got to have a pretty strong stomach," says Jonathan Miller, chief executive of Miller Samuel, an appraisal firm.

Source: The Wall Street Journal, Christina S.N. Lewis (03/07/08)

Tuesday, March 4, 2008

Buying & Selling Real Estate in Carova Beach.

I have harped on this to many of you individually, but there is no ammunition like education when it comes to buying or selling property in Carova Beach. There are properties out there that either the Seller does not know what they are sitting on, or Buyers that don't realize what they just bought, worse the real estate agent thinks they know the difference...and don't. Let me explain via 2 examples:

Case 1: A couple buys two lots side-by-side years ago and never had any site evaluation done on the properties and have no idea of the elevation of the lots. They place them on the market with an agent who does NOT work in the 4WD and has no idea where the lots are even located. An offer comes in for both lots at $115K and $105K contigent on a site evaluation and elevation survey. These lots are located in a flood zone that would require flood insurance but the survey reveals that there is enough elevation to be removed from the flood zone and thus no flood insurance requirement if a house is built on either lot. (Note: application for removal of flood zone with FEMA in this case is free) Who paid for the Survey? The Buyer. The Buyer's agent already knows these properties are more valuable if removed from the flood zone and the Buyer is the only one with the survey information. Seller mistake #1. Then the site evaluations come back and one of the two lots will not support a conventional septic system. Buyer and agent know this a $2-3K problem. Seller and Seller's agent assume property is unbuildable. Mistake #2. At this point the Buyer is not obligated to purchase either lot but decides to renegotiate. One lot is fine and he will pay the $115K contract price but will only offer $50K on the other unsuitable lot. Seller agrees for fear of losing the deal. Buyer pays $165K for two side-by-side lots totaling 1.2 acres close to the beach. Both are now buildable and in an X flood zone.

Case 2: Buyer decides to buy a risky lot with little dune in front of it for protection. Buyer's agent, who actually sells her fair share in the 4WD, advised against buying the lot. Buyer's transient ego compels him to ignore his agent's warning, because he "works for the government and knows the risks involved." He buys lot for $375K three years ago. He never looked at the CAMA small structure setback line which because of the virtually non existant dune in front of him, rendered his lot unbuildable. He is listed under $99K and is finally under contract. Sadly, he bought more than just one of these lots, some for more than $375K.

Folks, in this market right now, there are lots listed for $400K+ that are unbuildable and worth about $5K. There are also lots that are listed for about 50-75% of what they are worth. With all the potential changes coming down the line in the years to come, knowing the ins and outs will make a huge difference.

Get Smart or Find Smart.