Florida Tax Reform is a Good Start

By Guest Author Calum MacKenzie, New Tampa, Florida

The recent bills passed by the Florida legislature represent a good start toward repairing our very broken system, but they stop short of being a full solution. The current broken tax situation is the culminations of years of explosive growth in real estate values coupled with a well-intentioned attempt to limit the damage done to long-time Florida homeowners. The tax cut and tax cap bills passed by the House and the constitutional amendment each address parts of the situation that have made Florida notorious for its high property tax values, but they do nothing to address the inequities of a system that offers special tax breaks to some homeowners by displacing their fair share of the burden onto the shoulders of others.

In 1995, the legislature recognized the effect of rapidly rising real estate values on current homeowners by instituting Amendment 10, known as Save Our Homes. In essence, homeowners were feeling the down side of the real estate boom. Rising home values meant higher taxes, in many cases, so much higher that some were in danger of losing their place of residence. Save Our Homes mitigated the tax rise by putting a cap on how fast the assessed property value could rise. The fact that the amendment only applied to homes that are classified as primary residences is consistent with the intent of the bill – to prevent those who had limited income (not necessarily LOW income, but limited in the sense that it was dependent on the income of a single homeowner) from being taxed out of their homes.

Unfortunately, it was a nearsighted solution. Over the course of ten years, Save Our Homes has been the main contributor to the inequity in a system that can tax one homeowner $4000 while his next door neighbor in an identical home pays $2,300. In addition, it offered no benefits whatsoever to those who own rental property, businesses or second homes.

The effect of the proposed amendment will be to phase out Save Our Homes and replace it with a far more equitable property tax exemption that will apply evenly to all primary residences. While this doesn’t address the inequities completely, it is an important first step in fixing a system that has become irretrievably broken. The danger is that in all the congratulatory hand-shaking, our elected officials will lose sight of the fact that they have only cleared the first hurdle. It’s important that we all keep the pressure on and hold our politicos accountable to fulfilling the promises that got them elected.

Read more at Florida's Super Exemption.

Calum MacKenzie is Broker/Owner of Real Living Southern Homes and can be reached at (813) 948-5900.

Home prices and sales decline

There was an interesting article in today's Sarasota Herald Tribune about the decline in real estate prices and sales volume across the state of Florida. The report indicates that Charlotte County-North Port's median price was 21 percent below July 2006 while Sarasota-Bradenton's was 12 percent below the comparable month last year. These two figures marked the biggest declines statewide among Florida's 20 largest markets.

I am not sure if this information comes to a surprise to anyone. It is not like the newspaper has been quiet about the real estate slow down. Articles like this are usually in big, bold print on the front page.

Part of me is happy to read this kind of article because it just means that we are that much closer to the bottom in my opinion. Sellers need to realize that market values have dropped and if they truly want to sell they need to drop their asking price accordingly. If they don't drop their price to realistic levels then they are just wasting a lot of people's time.

In addition to wasting time they screwing up inventory levels. If you took our total inventory and removed all of the unmotivated sellers who have not adjusted their pricing to realistic levels it would cut the number of homes for sale dramatically.

I am not tooting my own horn (mainly because the home has not closed yet) but I sold a property I own in about 60 days because of proper marketing, staging and pricing. It can be done but you need to remove your emotions from the equation in most instances.

Lawrence Yun, who is an economist with the National Association of Realtors so his view might be skewed, think that this is a short term problem

"There is an underlying pent-up demand, which I believe will begin to show up in home sales.

"So temporary softness, but toward the end of the year, sales should be beginning to show a rise."

I think there is truth to these statement only from my own personal experience. My phone has been ringing lately with people who are looking to enter the market because they are smelling blood in the streets. And, perhaps more importantly, they would like to own a nice property in a great part of Florida - Sarasota.

SKY Sotheby's Property Auction

SKY Sotheby's International Realty is pleased to announce that we will be hosting another multi-property auction on November 16, 2007. This auction might interest a seller who has tried the traditional home sales process with no success and would like an alternative method.

Follow this link for more information: SKY Sotheby's Property Auction

Seller Benefits:

The seller is in more control of when the property will sell

Buyers are required to compete within a tight timeframe

Exclusivity - There will be a limited number of properties in the auction with a tremendous amount of exposure. Sellers will stand head and shoulders above the 14,000 other listings in Sarasota and Manatee counties

No drawn out negotiations

Non refundable buyer deposit

Cash, as-is sale

Closing within 30 days of contract

Extensive local, national and international advertising to promote your home

Buyer Benefits

Possibility of purchasing your next home at current market prices

No drawn out negotiations

Please contact me or call 941-308-6491 if you are interested in becoming a buyer or seller in the SKY Sotheby's International Realty Fall 2007 auction.

Home Selling 101 Part 2

Earlier in the week I wrote about the home selling process. You can scroll down to read it or click selling home in Sarasota.

I just wanted to write an update to the sales process. I did receive an offer on the home and it is now under contract. I am satisfied with the the sales price. Although, I would have much rather sold it in 2005 when someone probably would have paid $425,000 - $450,000. Oh well. Hindsight is 20/20 and we all just have to work in the market we are in, not the market we wish we were in.

The next step is to wait for the buyers to conduct their home inspection. This is planned for next Wednesday. Since the home was built in 2003 I am not too worried about it. The inspector always finds something that needs repair. Keep that in mind when selling or buying a home. Homes are used and things periodically malfunction. Don't get too worked up about it. I have seen buyers and sellers blow up over little items.

I am providing the previous survey and prior title policy to the buyers so they can save a few bucks. Providing this information is not a requirement on my part but it is something easy that I can do and my good efforts helps make it a friendly transaction.

I listed the home June 12th, 2007 and it went under contract just over 2 months later. I don't think that is too bad in a slow market like this. Good thing I listened to my Realtor. ;-) I have my fingers crossed to see if it stays together.

Just Sold on Longboat Key

My clients just purchased this spectacular 4 bedroom, 4 bath, 3,000 square foot home/condo directly on the beach of Longboat Key. This has the feel of a home but is actually a 2 unit condo. The living room offers soaring ceilings, a built-in wet bar, gas fireplace and French doors out to the private swimming pool, yard and beach. The curved staircase leads to fabulous master suite with stunning views of the Gulf of Mexico. This is a very special property and I think the new owners will have a fantastic time on the beach.

Since it is now public record the sales price was $1,850,000.

Homes Selling 101

I own this home in east Sarasota and decided to sell it. So I listed the home back in June. Is it the best time to be a home seller? For some yes, others no. It really depends on your situation. In my case, I bought the home back in 2003 and have other uses for the money and desire to simplify a little. The lakefront home has a pool, 3 car garage, was built in 2003, 3 bedrooms, 2 bath, den and in a great family neighborhood. It is a very rentable house. If I am unsuccessful in selling it I will rent it.

Obviously, right now it is a strong buyers market. Every seller needs to be aware of the current market conditions when deciding whether to sell or not. If you are not that motivated to sell it is probably best to just not list your property. I guess I would describe myself as slightly motivated. I am motivated to sell it for around what I consider is a fair market price.

Preparing the property
You want to get this stuff done prior to putting the home on the market. I fixed all of the little neglected items that every home has and used touch up paint where necessary. Clean. Clean. Clean. No one likes a dirty home. The inside is looking good.

Two pallets of mulch please. I had Home Depot drop off 2 pallets of mulch to spread around the garden beds. I trimmed the trees, spread the mulch and pulled the weeds. The outside is looking good.

Pricing
This is the most important part of the equation. I could have the best property with the most visible marketing plan but if I am unrealistic on price it still won't sell.

So I go to the Sarasota MLS and pull up the homes that have recently sold in The Enclave. Since January 1, 2007 there have been 5 homes that have sold in the neighborhood. That is good. I have some data to substantiate our asking price. In this market, there are pockets where there are no comparable properties so pricing is tough.

So I do my homework and keeping the current market conditions in mind establish an asking price of $389,900. The price is a little ambitious but not too much. When you are the seller it is hard to stay unemotional when deciding on a price. We naturally want to put as much money in our pocket as necessary. I am still the least expensive home in the neighborhood so I shouldn't miss any showings.

Marketing
Professional photographer comes out and takes photos. I think he did a good job. He certainly did a much better job than I would have done.

High quality property brochures are made

500 "Just Listed" direct mail pieces are produced

The SKY Sotheby's International Realty sign goes in the yard.

I display the home on this website and comment on it on my blog. This blog actually gets quite a few visitors.

The home is put on the SKY Sothebys website, Sothebys website as well as Realtor.com, Trulia.com and all of the other national real estate websites.

500 "Just Listed" direct mail pieces are mailed to expose the home to potential buyers.

Finally, the property is entered into the Sarasota multiple listing service (MLS).

Showings and price adjustments

I listed the home on June 12th. There was an initial rush of showings which is normal. Everyone waiting on the sidelines for new listings like this come see it. That is why proper pricing from day one is important.

After getting feedback from the agents who showed my house I decided to lower the price to $374,900. I was getting a steady number of showings. After around 20 showings I got more feedback from the agents and decided to lower the price to $364,900. So, I have had the home on the market at this price for about 3 weeks.

I have been meaning to write this a for a couple of weeks but have been busy. I am writing it now because someone is interested in the home. There are no offers yet but it is looking positive. I will post again if the home goes under contract.

Harvey Vengroff vs. Sarasota city commissioners

The Sarasota Herald Tribune had an interesting article about how a group of Sarasota landlords is requesting a recall of Sarasota city commissioners. The Sarasota Landlords' Association is seeking to remove the commissioners because on July 19 they voted unanimously to override the new property tax rollback rules established only a month earlier in a special legislative session.

The city of Sarasota was pegged for a 9 percent cut based on the fact that it has raised taxes substantially in the past.

Landlords, snowbirds and commercial property owners are upset about how the current Florida property tax system unfairly favors homesteaded properties. Florida's Save Our Homes constitutional amendment caps caps property tax increases for homesteaders. This puts a burden on the back of non-homesteaders.

Harvey Vengroff held up his hand to make a recall motion at the landlords' gathering this week. According to the Sarasota Herald Tribune Vengroff owns 1,400 units in Sarasota and Manatee counties and runs the 2nd largest collection agencies in the world.

Vengroff and the landlords' association is gathering a petition for the recall. However, according the newpaper a recall will be extremely difficult to accomplish. Perhaps their motivation is to get as much press as possible.

The Florida property tax system really is unfair and the latest attempt to fix the problem by the Florida government does not help non homestead property owners. If the bill is passed in January the motivation to make any immediate repairs to the tax system will be gone. As a landlord I would probably vote for a recall.

Harvey Vengroff seems like an interesting guy. This article gives a few tidbits about him:

One day about five years ago, Harvey Vengroff turned to his managers in his Sarasota office and said, "I'm going sailing. I'll see you in two months."The next day Vengroff didn't show up for work. His managers thought he was kidding. A few days later, when he still didn't show, they realized he was serious.

Harvey Vengroff manages by empowerment.

He's not afraid to say, 'I don't know the answer.' Most bosses say they know everything.

He apparently hates meetings. Nobody sits down. If you sit down, the meeting is going to last too long.

He was the keynote speaker at a Sarasota Chamber of Commerce Committee of Economic Development breakfast. The event, packed with men and women in business suits, was held at Michael's on East. Vengroff ambled in wearing his trademark corporate uniform--a T-shirt and shorts.

This guy sounds cool. Harvey do you need any help with your real estate? ;-)