As our country reduces its dependence on oil and its carbon footprint through energy conservation, there are many benefits to making our homes more energy efficient –one such benefit is Energy Efficient Mortgages. According to US Energy Protection Agency – Energy Star Program, an Energy Efficient Mortgage (EEM) is a mortgage that credits a home’s energy efficiency in the mortgage itself. EEMs give borrowers the opportunity to finance cost-effective, energy-saving measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans thereby allowing borrowers to qualify for a larger loan amount and a better, more energy-efficient home.

To get an EEM a borrower typically has to have a home energy rater conduct a home energy rating before financing is approved. This rating verifies for the lender that the home is energy-efficient.

EEMs are typically used to purchase a new home that is already energy efficient such as an ENERGY STAR qualified home. The term EEM is commonly used to refer to all types of energy mortgages including Energy Improvement Mortgages (EIMs), which are used to purchase existing homes that will have energy efficiency improvements made to them. EIMs allow borrowers to include the cost of energy-efficiency improvements to an existing home in the mortgage without increasing the down payment. EIMs allow the borrower to use the money saved in utility bills to finance energy improvements. Both EEMs and EIMs typically require a home energy rating to provide the lender with the estimated monthly energy savings and the value of the energy efficiency measures — known as the Energy Savings Value.

EEMs (and EIMs) are sponsored by federally insured mortgage programs (FHA and VA) and the conventional secondary mortgage market (Fannie Mae and Freddie Mac). Lenders can offer conventional EEMs, FHA EEMs, or VA EEMs. For more information go to http://www.energystar.gov/index.cfm?c=bldrs_lenders_raters.energy_efficient_mortgage

Most of us will never have an opportunity like this in our lifetime. Imagine a time when property values are low; interest rates are low and the added benefit a tax credit plus Florida residents get the added benefit of tax portability.

Homeowners who have owned their primary house for at least five years will be able to sell those houses and receive a $6500 Tax Credit toward the purchase of another primary home. In addition in Florida we have Tax Portability, so the tax benefit you have from owning a house for a long time can be transferred to your new primary home.

Yes you can have your cake and eat it, too. But the window of opportunity is very short… you must be under contract for the purchase by April 30, 2010 and close by June 30.

Everything a homeowner would want is here now. Low property values; low interest rates; tax credits and tax portability. If you want to know how these new credits benefit you or how much your current property is worth   contact me at 305 510.0647 or carlosruiz803@comcast.net .

Today I received the Certificate of Completion for our home improvements that started on March 5 of this year. We still have some punch list items to complete, but as far as the City is concerned, we finished.

Some of you followed this process which I started to cover on a blog, but ended up keeping a photo record on facebook. If you want to see progress pictures you may contact me through Facebook.

The photo above shows how our house in Coral Gables looked before remodeling. It was a 2 / 1.5 with a detached garage. Below are photos of the the house as completed  — it is a different house with personality and all the conviniences. But more important, it is much more energy efficient than its predecessor.

Here is what I learned about construction in Coral Gables. Coral Gables has a reputatioin for being a difficult place to build, but they are actually better than most Bldg Depts. However, if you plan to do any construction in the Gables, you need an Architect who knows the process in Coral Gables and prepares a good set of plans. You also need a contractor who has built in Coral Gables and knows that he is not going to be able to cut corners or procedures.

If you can avoid doing revisions to your construction drawings you will save a ton of time. It is better to spend more time planning and designing than revising.  Particularly structural revisions, can take a days or weeks to review. Most building inspectors are cooperative and will give you a realistic window of time for the inspection. When you are building, you need to make sure your contractor does not get into a personality conflict with an inspector. That usually will end up costing you time and money. So make sure everyone on your project is cooperative and courteous.

You also do now want to attract too much attention from Code enforcement while under  construction. So make sure there is no loud music or loud roach truck. Roach truck, are the lunch trucks that stop by the site to sell food to the workers – they usually have loud air horn playing “la cucaracha”. Your contractor also needs to keep trash in the dumpster and make sure the street is clean and no parking on the sidewalks.

If you and your contractor keep up with the inspections and documentation, the process can go relatively smooth and fast. But you need to have patience and budget some extra time and money beyond the contractor’s budget and schedule. This is still a good time to remodel your home as good contractors, sub-contractors and labor are still available. While it was a challenge, it was very rewarding… however I am an architect; have built before and I devoted many hours to keeping the project moving. If you don’t have experience building or the time, you may want to hire a project manager to manage the architect, contractor and the permitting process. This is a good time to buy a fixer upper in the Gables and create the house of your dreams in a great community.

Local government is starving for money because of a big drop in tax revenues as a result of lower property values. So there is a focus on generating income from other sources - open permits and code violations are becoming a favorite source of income. Yesterday I was at the building department and came across a homeowner who had received a notice about an open permit on a garage door. They were going through the maze of re-opening the permit asking for inspections and closing the permit again.

Let me explain how the system works so maybe you can make your life easier. If you live in Coral Gables the process to find out is very easy — you may contact Tony Silio at 305 560-1807 or asilio@coralgables.com .  He will research it and let you know if everything is alright with the permits.  Code enforcement is another department and he will just ask you to call them directly.

If your property is Miami-Dade County, it is also relatively easy to find open permits. First find your folio number by going to http://gisims2.miamidade.gov/myhome/propmap.asp and searching for your property either by your name or address. Once you have your folio number go http://egvsys.co.miami-dade.fl.us:1608/WWWSERV/ggvt/bnzaw960.dia and at the bottom of the page you can search for Open Permits by Folio number. Enter your folio number and follow the windows to find out about open permits.

Once you find your open permit numbers you can return to the same page and enter the permit numbers or hit the links to find out the details and who opened the permit. Look at both the name of the company and the qualifier. Subcontractors often close one business and open another under another name. The licensee is the person responsible for the open permit.

If the contractor is still in business you can contact them and ask them to close the permit. Some of the more reputable companies will go ahead and close the permit. If your contractor refuses, you can file a complaint with the building dept or the Florida Board of Professional Regulations. But that means that you’ll have to request a change of contractor and pull a permit in your name to request a final inspection.

Please bear in mind that local government agencies are starving for cash and they may find other things wrong with your property. So do not let the inspector wander through your home looking at other things. If the permit is for the roof, he/she does not need to go inside the house. If it is shutters he/she can see them in plain view.

These are tough times and everyone is out to find money to plug the holes in their budgets. Local government is having the sames problems and open permits and code violations are an easy way to make a few bucks. Try to resolve your problems before you receive a notice.

Different regions of the country have different reasons for their recovery. Miami-Dade and Broward Counties have different factors driving them. While the banking industry and the Federal Government are negatively impacting the market through stricter lending and appraisal rules, a large number of cash buyers are snapping up the foreclosed properties. South Florida has three types of buyers unlike other markets. The conventional buyer who has been parked in rental properties for the past 4-5 years as result of population growth (slower growth than before). The second home buyer who may live in another state or abroad. The investor who may be local, from another state or foreign investors who buy exclusively cash.

Many sellers and agents are favoring cash buyers over pre-approved buyers. With new Fannie Mae finance guidelines and new Federal appraisal rules, closing a financed property is becoming very difficult and in some cases impossible. In addition, cash strapped local government is trying is focusing on open permits and illegal construction as a means of making up loss revenue by overcomplicating the process.

For many banks it is more beneficial to sell these properties for less money to investors paying cash and buying AS-IS. The result is that lower income people who can now afford these homes are losing them to investors buying cash. By the time local government recognizes the damage they have done to lower income residents, all properties under $250K will be gone.

Whereby 12 months ago some of my foreclosed listings would sit for weeks before receiving an offer, now in days they have multiple offers often starting above asking price. Properties that were selling for $450K in 2005 are being purchased for under $200K. I just closed on a property that sold in 2005 for $2,165,000 and sold this week for $720,000 – by the way the asking price was $699,000.

In conclusion:

• Real Estate bid wars are back.
• Cash buyers are getting the best deals.
• Government actions to protect buyers are hurting lower income buyers who must finance their purchases.

There is no doubt that our Country is in a period of change and President Obama is keeping his word and becoming the President of change. So the question is how long before the capital gains tax rules change? Real estate has been the best investment because it offers many benefits, but the greatest is tax free profit. At least in your primary home a married couple could realize up to $500,000 in profit free of taxes and pay only 15% for profits above that amount. Singles can realize up to $250,000 net profit without paying taxes.

During the rising market of the 1990’s and early 2000’s many people were buying homes, fixing them up and living in them for a couple of years and cashing out. This can be done repeatedly as long as this is your primary home and you lived in the house at least 2 years within a 5 year period — so many property owners took advantage of this tax rule and they made a lot of money.

But with the Recession and cash shortage in government, it won’t be long before that sacred cow is slaughtered. There are talks about increasing capital gains tax to 20-25% and possibly changing the rules that govern real estate investments.

This may be a good time to find out how much equity and profit you have accumulated in your house. With a recovering real estate market, properties that are in great location and in move-in condition are in high demand.

This is also a great time to do those improvements you have been putting off like changing the windows to impact resistant windows (for properties $500K+) or changing those hurricane panels to accordion shutters (for properties under $500K). If the bathroom needs updating and the kitchen new counter tops and appliances this is the time to make those changes and get your house in top shape for the demand that is already building up. Contractors are hungry and you can get good quality and save 15-25% in the improvements.

There is  no doubt that this administration is going to change the tax rules and tax structure — the question is when. We may not know when this change is going to happen, but if you have owned your house for 10 years or longer and you have significant equity and profit, it may be a good time to downsize and take that profit before uncle Sam takes it away from you.

If you are one of those Baby Boomers and you want to know how much profit you have in your property contact me or another realtor to request a free Comparative Market Analysis and equity-profit study.

With government doing the wrong thing at the wrong time and banks being extra cautious, the term “money talks” has greater significance today. Particularly in the world of foreclosure properties cash is King as buyers scramble to take advantage of the many bargains.

Early this year Fannie-Mae instituted new lending guidelines that make many South Florida condos impossible to finance. Then the County Commission passed the new Certificate of Use Ordinance 2008-133 that requires an inspection and a record of code violations of all foreclosed properties–making it almost impossible to finance these properties.

The result is a sea of foreign investors coming to our shores with cash ready to buy. Needless to say these cash buyers are taking the plums and the lower income people in our area who could have taken advantage of these low priced properties are left with the pits.

By the time your Dade County Commissioners realize the damage they have caused, it will be December 1, 2009 and first time buyers will have lost their opportunity to get $8000 to buy these homes.

At first this was happening in the lower priced properties under $300,000, but we are now seeing this happening at all price ranges. The surprising part is to find out how much cash is available and how quickly the oversupply of properties is being absorbed.

I am not prepared at this point to say that we may be staring at a new boom in the near future, but if demand continues to increase and builders do not start building again, we could have a shortage of housing again in about two years.

But the world economy is still weak and anything could spook the buyers, so it is better to be careful and invest with knowledge and common sense. But if you have cash, you are probably going to make a killing at this time…in today’s market, Cash is King!

Those of us who have been selling foreclosure properties have been getting 10-20 offers on the best of these properties. In some cases buyers will send the offer first and see the property later. Buyers who want to get these properties are offering asking price and above and buying cash. This week I put an offer for $117K on a property offered at $128K. I suggested to the buyer to offer full price since she was buying cash. To make a long story short, by that afternoon offers had reached $147K and climbing.

Until recently I thought the focus was  properties under $300K, but this week I received a new listing in the $700K range. I thought it would take longer to sell, but we put it on the market on Thursday and we already have two full price cash offers on the way and I can already see that this property will sell above asking price and probably above appraised value. However, some of these buyers are buying these properties at 30-50 cents on a dollar, so it is very unlikely they are going lose money if they hold the property for 3-5 years.

Until recently we had about 5 years worth of single family properties under $250K, by now we have about 10 months worth of inventory when measured against actual sales and about 5 months when measured against pended sales. I thought $250K single family properties were going to disappear in Miami-Dade in about two years once the market became active again — I think this is going to happen much sooner. If we have any left in 12 months, I expect they will be located way South or West.

Unfortunately, the County Commissioners in their great wisdom passed the Certificate of Use ordinance that requires sellers to inspect the properties and record the inspection in the County Records. For all intent and purpose they placed those properties out of reach of lower income buyers, because banks are not offering financing for properties with recorded code violations.

But don’t worry, there are plenty of foreign and out of state investors and vulture funds buying these properties cash. These folks will use their ingenuity and cah to resolve those code issues; raise the prices of those properties and find other buyers later or rent them for a year or two. If you are one of those buyers who lost the opportunity of owning a single family Miami-Dade don’t forget to vote in the next County Election.

If you are a buyer looking for foreclosed properties under $300K that will require financing, I suggest you focus in the municipalities where the County ordinance does not apply. You can also look for foreclosed properties in Dade County that do not have many code violations – those may be newer homes (2000- up) or condos. Condos tend to have less problems with code issues.

If you are a cash buyer, you can review the inspection report and buy those offers at a bargain and then resolve the code issues later. Just make sure you know what you are doing and that you have the means to resolve the issues identified in the report as soon as possible. There may be some problems you can’t resolve without demolition. So be careful out there.

It has been about two weeks since my last blog and things are now heating up. A few things are evident at this time, we may be substantially finished by July 4th, but we will not close the permit for at least a month thereafter. But I have to admit, thing are moving much faster than I thought they could ever happen in Coral Gables.

As of today the roof is completely covered and tomorrow the roof tile will arrive. The exterior of the house is already primed and with first coat of paint. The new septic tank maybe installed this week and that will wrap up the main work needed to get the family/multi-purpose room finished. The drywall finishers have already started finishing the drywall and it will be completed by the end of the week. I met with the wood floor subcontractors and they need for the AC to be turned on for their work to be done.

Tomorrow Monday they deliver the whirlpool for the Master Bath, the front door for the house and the exterior door for the garage. At that point the house will be secured and they can deliver the rest of the plumbing fixtures. I asked my neighbors to keep an eye on the house, because it is at this point that thieves like to visit construction sites. Fortunately I have good and vigilant neighbors. A few days ago a relative visited from Georgia and I went in their van to show them the house after hours. Immediately I had a call from a neighbor to tell me that a van with Georgia license plates was stopped in front of the house and should they call the police.

Most everything is going according to plan except for the budget. I blew the budget when I had to re-roof the old part of the house. That was really a poor judgment call on my part during design. I was trying to save that money, but the fact is that a roofer will not give you a warranty that will cover the joint of the old and new roof. In reality this is better for re-sale because now I can say all roofs were replaced and under warranty. By the way, one thing I did is that I negotiated a transferable warranty. Most roofing warranties are not transferable…I learned that on another house I remodeled and sold. So this time I had the sub-contractor put it in the contract that I can transfer the warranty to a new owner.

The next few weeks are going to be very hectic and I will probably spend a good deal of my time inspecting, buying final trimming pieces, lighting fixtures, etc. I would not recommend to anyone to do something like this unless you or your partner can spend at least 50% of their time dedicated to the project. There are many details that fall by the wayside if you are not there to correct them in time. Just yesterday I saw that they missed one light fixture on a column…it was obvious, but it was missed and I already sent a text to the contractor to follow up.

The next few weeks you may see weekly blogs as the interiors come together fast. I had planned to do daily blogs, but that was impossible with work and construction. But so far so good…I have a great contractor and a great time to build. If you have been considering doing some home improvements this is the time to do it. Contractors are still looking for work and good subcontractors are also hungry. By the way the strategy of having a 4th of July party to celebrate the completion of the work was a great idea. The contractor is doing everything possible to finish by that date, because many of his friends are invited to come and he can really shine on that day.

For example someone spends $5000 remodeling a bathroom or adding a lanai in the back of a house with no permit can easily spend $2500 to remove it and another $2500 in consulting fees plus fines. I know of one house that racked up over $50,000 in fines by enclosing a carport in one weekend that probably cost them $3,000 to close. I have a house now that will be taken off the market because it has an illegal addition turning a single family into a duplex without permit…that property has about $200,000 in fines and was sold for $170,000.

I realize the permitting process in South Florida is a pain and for the average consumer the building process is very challenging. I also know that most people who comes to do work in your home is going to tell you that permitting is very difficult, is going to cost you more and inspectors may find other problems that may increase construction costs. All that is true, but the cost of resolving those issues when you are selling the house are much greater and more expensive. Needless to say a buyer that knows that you have done work without permit is going to reduce their offer . If you do not disclose it and the buyer finds out later, he can sue for damages for not disclosing.

So if you are going to spend money upgrading your house, spend a little more and do it right and with proper permits. More municipalities are requiring inspections at the time of sale in South Florida. Also I am hearing of code enforcement officials who are going online looking at the descriptions of the homes on the MLS and checking the permit records and then citing property owners.

For example a house description says “newly remodeled kitchen and bathrooms or converted garage.” They check their records and find no recent permits for those improvements and their next step is to call the listing agent to see the property as a prospective buyer — well you know the rest of the story.

So the moral of the story, is that if you live in South Florida and you do home improvements, take the time to hire an architect; get the proper permits and at the conclusion of the work, make sure you get all final inspections and permits are closed. It is cheaper to do it at that time than when you are trying to close a sale.