Thursday, May 16, 2013
5 Reasons Why a Home Fails to Sell
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To get a home sold, two things need to take place. First, we need to position it properly and price it well so it’s important to understand the pulse of the market. Once we establish the price, our job is to market it to its fullest to all the buyers out there by being very aggressive. Easier said than done. Not all agents do this. Here’s why homes don’t sell and what needs to happen.
1. There’s no specific marketing plan to help sell the home. We have a 31-point plan that outlines what will happen in the first 2 weeks, 30 days, etc.
2. A realtor puts the home in the MLS (Multiple Listing Service) and then just waits. If it was that easy then all the homes in MLS would sell, but only 5 to 8% sell if the only exposure is in the MLS. In Southern New Jersey this means 92 to 95% don’t sell if they are just in the MLS. The agent needs to promote the property to the buying public and the agents at all times.
3. Database marketing is lacking. A lot of buyers are looking on the Internet and plan to purchase in 9 to 18 months, but most agents don’t have a way to market to them. This large group that’s looking to buy later isn’t being cultivated, but we capture their information and keep in touch with these potential buyers on a weekly and monthly basis. We build relationships with them. These potential buyers come to us because we keep in touch with them, educate them and they ultimately feel comfortable working with us. We nurture these leads over time and turn them into buyers.
4. Almost 90% of the time buyers will go to the Internet first to get information on a property. You can find just about every home today on three main Internet sites—Zillow, Trulia and realtor.com if it’s in the MLS. Yes, your home gets exposure to online traffic, but a great realtor needs a system to drive online home shoppers back to their own web site to capture their information. For example, we drive buyers to our Southjerseryhomeowner.com site where we capture 300 buyer inquiries a month. These inquiries are great leads for our sellers. Agents are not doing this which is keeping homes from selling!
5. The agent isn’t in touch with the seller. Agents must be in constant communication with the seller and share feedback from potential buyers so the seller can make changes midstream, such as change the price or condition of the home. The bottom line? The agent must engage in clear constant communication with the seller. If not, properties won’t sell.
Give us a call so we can tell you where to be positioned and how to be successful in this market. Please contact us at (609) 398-5333 or email us at
Jeff@JeffQuintin.com.
Monday, May 6, 2013
3 Industry Secrets for Getting Top Dollar When Selling Your Home
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The market is on fire! Partly because of the time of year we are in and partly due to the dramatic shift in our marketplace. As of just a few months now, we are completely in a seller’s market where there are far fewer homes for sale than there are buyers. So how does a seller in this environment get top dollar on their property? It’s more than just time of year or general buyer trends; it’s a matter of actively, aggressively going after the best outcome. Here are three tried and true strategies that we use to get our sellers top dollar.
Price Your Property Effectively
We’re not suggesting you set a price lower than everyone else in the neighborhood to get it sold. But we are saying it’s critical to know and understand the market pulse in your area as it relates to today. The key word here is today. It’s no secret that one of the most prevalent methods used to determine market value is by evaluating comparable properties.
Appraisers and Realtors® in general, look at homes sold in the last 6 months to a year when considering values. However, when we are dealing with the drastic change that is our housing market today, it’s important to look at under contract values. This is what shows the truth of what buyers and sellers value in the market right now.
Follow the Laws of Supply and Demand
In any marketplace, whether real estate or otherwise, the basic principles of supply and demand play a huge a role in market activity. With real estate, we tend to see an upswing in activity beginning the spring months and it stays active until the fall when people slow down from their home search. Listings also follow closely with those trends.
When there is increased supply, demand goes down. Conversely, the fewer homes available for sale will dictate increased demand – a phenomenon we are experiencing these days. This translates to the spring and summer markets being better for sellers, with the expectation they will earn top dollar if the home is well priced.
Promote, Promote, Promote!
You can have any number of homes on the market but until and unless the word gets out, they will just sit there. Promotion is the key word and the way you promote your listing is also critical. In today’s fast paced, very NOW world – it is essential to cater to buyers’ needs. That means putting your property on social media, on every syndicated property home search site possible and advertising in other locally preferred ways.
Kick it up one more notch by working with a broker that has an extensive database of active buyers that are just waiting to be matched with the right property. Imagine – finding a buyer that is willing to pay over and above your asking price because your home is exactly what they’ve been looking for!
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The first step to getting top dollar on your home is to know and understand your local neighborhood’s buying and selling trends. Contact us today for an updated market analysis that’s catered to your locale. We’ll give you real time values so you can move forward with your listing with all the leverage you need to come out on top!
Tuesday, February 26, 2013
Getting Through a Tax Appeal; How To Request Property Taxes Reassessment
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Please Leave Your Comments Below
Now that the holidays are over, what comes next? It is the beginning of tax season. And property taxes are no stranger to this time of year. As expected given the tumultuous past years we have collectively faced after the real estate bubble burst a while back, many homeowners want to make sure they are paying the right amount of taxes on their property. If you are unsure as to whether your property taxes accurately reflect the current value of your home, you can request the County Board to reassess the current taxes you are paying.
Even though it may sound like a lot of time between now and April 1st, the deadline to submit your application can creep up very quickly, leaving you in the dark with not enough time to prepare. Here are some valuable tips on how to prepare for a tax appeal request along with some important links that will provide further information on the process.
For Tax Appeal Success, You Need Evidence
Until and unless you provide the board with valuable, viable information that supports your claim to have your home’s value reassessed it likely that you will not be too successful. The key is providing evidence demonstrating that other, like kind properties in your area have recently sold for amounts that are far less than your current property value.
In the real estate industry agents and other professionals often deal with “comparable sales” reports. These are detailed reports that derive what the value of a home should be based on other similar homes that have the same profile. This profile could be amenities, number of bedrooms and bathrooms, square footage, type of structure, type of garage, location, school district – a number of factors. Realtors aptly perform a comparable sales analysis since they are well versed in the area and have a vested interest in understanding their neighborhoods’ property values.
Realtors know and understand the ins and outs of such procedures as applying for a reassessment of property taxes. Both agents are attorneys, for different reasons, offer valuable insight and experience into the process. Important details like the fact that comparable sales must include sales that took place in the year preceding the current tax year and only through October 1st, can be missed if not managed by a professional. For this reason, it is always a good idea to have that professional backing when you are filing for a tax appeal.
How Can a Professional Help With Filing a Tax Appeal?
Whether assisting homeowners will filling out the petition of appeal form submitted to the board, coming up with a tax record sheet showing the current assessment on the land and building or establishing the perfect comparable sales data – working with a Realtor (supplemented with an attorney) is ideal. Not only do your chances of successful reassessment significantly improve but also if there are any roadblocks along the way you have knowledgeable support alongside you.
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If
you have decided to pursue a tax appeal, keep in mind that just like
filing federal and state income taxes, the closer you get to the
deadline the longer it can ultimately take for processing. ~
Here is a list of important and useful links that will guide you through many aspects of the tax appeal process. If you have any questions, please do not hesitate to contact us and we would be glad to take this on for you!
Commissioners: http://www.co.cape-may.nj.us/Cit-e-Access/webpage.cfm?TID=5&TPID=2815
Tax Assessors: http://www.co.cape-may.nj.us/cit-e-access/webpage.cfm?TID=5&TPID=2836
Tax Collectors: http://www.co.cape-may.nj.us/Cit-e-Access/webpage.cfm?TID=5&TPID=2913
Appeal Brochure: http://www.capemaycountygov.net/FCpdf/appeal%20brochurel.pdf
Appeal Frequently Asked Questions: http://www.capemaycountygov.net/FCpdf/FREQUENTLY%20ASKED%20QUESTIONS.pdf
Record Access Form:
http://www.capemaycountygov.net/FCpdf/record%20request%20form-psl.pdf
2009 Tax Rate Summary: http://www.capemaycountygov.net/FCpdf/09%20Tax%20Rate%20Summary.pdf
Monday, February 18, 2013
Flood Insurance FAQs for Southern New Jersey - Part 2 of 2
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Questions From Homeowner Brad
Brad – How fine-tuned are the maps right now? If you look on the map, my house is in an A zone, but my next door neighbor is actually in a V zone…it’s that close. What’s the defining line there? Can I switch over to a V? Or am I going to stay an A? What do you think?
Bill – What we’re told is the first those maps come out are very conservative. I think they want to give the worst news first. Again, it’s a rare situation usually to come out with completed maps. Because Superstorm Sandy hit they wanted to get as much information out as possible. Those maps are not complete. There’s a Wave Action Study that needs to be added into that map. The maps that you see in these Advisory Flood Maps right now…it’s really if you take a raw island without any structures at all…when the Lake Brothers came into Ocean City and found and started putting up the tents up by the Tabernacle…that’s what they used on these maps right now. Once those intervening structures come, I understand it as those V zones will shrink back closer to the bay and ocean.
Brad – My neighbor’s house is an identical structure basically to mine. If she would have the raise, it just throws off everything for the whole neighborhood and what to do with my house.
Bill – The city of Ocean City is also working on hiring a coastal engineer to help you, the taxpayers, and the owners in Ocean City, to make our case that the V zones should be shrunken in size, and they shouldn’t go as far as they do right now on the islands on these current maps.
What If I Don’t Raise My House?
Brad – What happens if you do have to raise your house? If you have to raise it, and you can’t – for whatever…structural reasons or what not, then where are you then?
Bill – We’re having difficult conversations. Right now, if you can’t raise the house, we’ve heard some of that. The Federal Government is saying if you get 50% of damage and the State of New Jersey is saying that house needs to be replaced, needs to be rebuilt structurally sound to withstand the flood. There are funds that the Christie Administration is working on getting funds to help people that have completely lost their house. Later this year they’ll be releasing some grants with some of the money they got from the disaster assistance. The State is looking to help. Again, there is up to $30,000 on your flood policy. If you have questions on the Increased Cost Compliance Coverage, give our office a call or you can e-mail me. We can answer all those questions. Each home is individual. You each have your unique questions, and we can help each one of you.
New Construction
Jeff – Let’s talk about new construction today. We have a lot of construction going on right now on the island…a lot of two unit buildings. Those are called duplexes that are being built. A developer builds a new building. He builds the new structure under the new elevations. Will Flood Insurance be available for two unit condos? Will there be a market for that? You said they’re not funding it…they don’t have enough money. They want the money. I just wanted to make sure, number one, there’s that option.
Bill – Yes. There’s going to be Flood Insurance available for everyone. It’s just the matter of the price. We don’t know exactly where the price is going to fall right now.
Jeff – Let’s say you’ve conformed. You’ve elevated up. You’re above that mark where you need to be. Do you think, at that point, Flood Insurance premiums would be the same that they were before, or are they going to be less?
The Higher You Go…The Cheaper The Price
Bill – The word on the street that FEMA is getting out there is the higher you go, the cheaper the price. So, if you were to build right now, starting today, you’ve got to use the Advisory Flood Maps to elevate. Then you’re going to be in your best price scenario. You will get the best price. The city of Ocean City, a week before the Christie Administration did this, said we’re going to elevate plus 2’. This means the Federal Government comes out with Base Flood Elevation and we add 2’. This island currently stands at 10’, so any construction in Ocean City has to be at 12’.
Jeff – That’s first floor Base Flood Elevation that has to be 12’?
Bill – Yes. Those floor joists down on the first floor for the equipment. You can have your duct work underneath the floor joists.
Jeff – Any other thoughts or anything you want to add?
Bill – One of the things I’d like to add…most of the construction up and down the coast was older houses that unfortunately got destroyed in the storm. In talking to agents on Long Beach Island, and you look around Ocean City, most of our new construction withstood the damage. It did not take the brunt of the damage of the storm. It pays to build a strong house.
Where Can You Go For Help?
We’re here to help you. You can e-mail back and forth – we’re always answering. There’s myself and four other siblings right now in the business. We have a staff of over thirty, above and beyond the McMahons in the office. We’re all more than willing to help you with any of your questions.
You may call 609-399-0060 or e-mail me at billm@mcmahonagency.com.
Jeff – Where does your agency service? Tell everybody which areas you cover.
Bill – We specialize in the coast. We can do anything on the coast. We know the coast. We have all the markets. Now more than ever it’s very important. Where we’re successful after the storm is that we have all the contacts with the insurance companies. The flood insurance company was in our office for three weeks. We had a guy in our office able to help us take in the claims…putting them in because we have buying power. Buying power is everything. Because we’re in Ocean City, we do a ton of Flood Insurance. We do it all the way down to Cape May County, we go all the way up into Monmouth County writing Flood Insurance. We had a huge book, and it really helps. We were able to get adjustors as quick as possible.
Jeff – Any questions? Give Bill a call or send an e-mail. Any questions for me or any comments, make them here at 609-398-5333 or jeff@jeffquintin.com. We’ll respond back to you as soon as possible. And, as always, I appreciate your watching, and always look forward to our conversation being the best of your day. Have a great one!
Helpful Links
* Find the elevation of your home. Most property owners in Ocean City should have a flood elevation certificate if they have flood insurance. Check to make sure it's not expired.
* Find the elevation required for your home under the new FEMA flood map. Search for your Advisory Base Flood Elevation by address. http://www.region2coastal.com/sandy/table
* See how your advisory elevation compares to Hurricane Sandy flood levels. Read the left column (NAVD 1988 datum) on the attached PDF (click on the PDF icon above). Make sure the flood elevation on your certificate uses the same NAVD 1988 scale as the ABFE maps (or see how the scales compare). The center column (NGVD 1929 datum) is the scale that appears on most flood elevation certificates in Ocean City. (Check the current tide level on the NAVD 1988 scale in real time. http://waterdata.usgs.gov/nj/nwis/uv/?site_no=01411320
* What if your home remains below the required elevation? One thing appears certain: Your flood insurance premium will increase (because federal taxpayers will no longer subsidize the flood insurance program).
* http://oceancity.patch.com/articles/elevating-homes-after-sandy-wait-and-see-approach-is-prudent?ncid=newsltuspatc00000001
Flood Insurance FAQs for Southern New Jersey - Part 1 of 2
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Today I have a very special guest that’s joined us. This is Bill McMahon from the McMahon Agency here in Ocean City. They are the leading insurance agency in town, doing a majority of the insurance in Ocean City and along the coast here at South Jersey.
Bill is here today to share with us some of the concerns, thoughts, and questions that are being asked with regards to all this information…all these things happening here at the Shore regarding Flood Insurance, Homeowners Insurance, and everything else as far as how it’s affected all of us here.
If you have any questions, thoughts, or comments, please e-mail me at the bottom of this blog. We’ll get the answers right back to you. We may not cover everything today, as this is a frequently asked questions overview.
The Biggert-Waters Flood Insurance Reform Act of 2012
Jeff – Bill, go ahead and give our viewers your contact information. If anyone has any questions directly with you.
Bill – I may be contacted at the McMahon Agency, phone number 1-800-448-6340. We’ll be happy to answer all your questions. We have three departments in our agency: Commercial Lines, a very good Condominium department, and Personal Lines department.
There are a lot of things going on at the Shore...there are a couple of things that have happened. There was a new law enacted by Congress. The Biggert-Waters Act was signed. The good news is that the law included a five year extension of the National Flood Program. There are a lot of changes. The problem with the program is that it’s broke. It was broke after Katrina. Superstorm Sandy put it further in debt. What we’re seeing in that lull was to get some Rate One properties because the program is so far in debt. They need to make up the money.
Advisory Based Flood Maps
The second thing happening in New Jersey after Sandy is that we were in a remapping for all of New Jersey for the flood maps. The flood maps were dated. We were told they were about thirty years old, and they needed to be updated. They were 90% completed in updating those maps when the storm hit. They wanted to get these maps out as quickly as possible to help the people rebuild.
Jeff – We’re talking about these new flood maps. Is that what they are talking about when they say “Advisory Based Flood Maps?”
Bill - Yes, they are Advisory Maps. On January 24th the Governor said to use those maps as law for rebuilding and elevating. In Ocean City we were very lucky. As much of the damage we see here in our town, we were spared the worst. If you go up in Monmouth County, Long Beach Island...they really got nailed. There are complete islands gone. They need to be completely rebuilt.
The Governor acted and said to use these maps as a basis. They’re going to be the future. If you’re building now, use them. There are some properties in Ocean City that need to come down because the damage was too great from the storm. We’re being told they need to use these maps. The rest of us…they’re Advisory Flood Based Maps which are not complete.
They rushed these maps out at 90% complete. One of the things in the maps they did not take into consideration yet, is a study on the Wave Action and how it hits the island with intervening structures, meaning dune systems and on the bulkheads on the bays. These are raw maps. The V Zones that you see on the maps now can be changed later.
V Zone and A Zone
Jeff – What does V Zone and A Zone mean?
Bill – V Zone stands for Velocity Zone. To be in a V Zone, a house on that area of the island can take a greater than 3’ wave. That wave can be created by water or created by the wind, making the water higher. If you only have 16” and the wind gets that up to over 36”…it can happen…then that’s how you get a greater than 3’ wave. The National Flood Program said a wave at 18” can cause substantial damage to a property.
In the A Zone, they’re going to take less than a 1’ wave. The A Zone is basically rising water, and it’s more prone than their V Zones and there on the mainland or areas that are not likely to flood. The A Zone is more likely to take rising water.
Jeff – Would every bay front home or every beach front home on all the islands be considered a V Zone? Or, is it true that some zones, you could be on the beach, and you have a big dune, but not be in a V Zone?
Bill – A lot of Ocean City, in the new Advisory Flood Maps, are in the A Zone because the last street to flood in Ocean City was Central Avenue. That’s the exit out of town and is close to the beach. It did not look like there was a lot of damage driving down Central Avenue right after the storm. The front part of Ocean City is actually a very high part of this island, so it is in an A Zone.
Base Flood Elevation
Jeff – How do the new maps affect current insurance policies? We’re going to bring Brad into my office shortly. Brad has a single family home in The Gardens. It’s 60-70 year old home…built in the 40’s or 50’s. Great area, but his home is not elevated. He has a front porch like an old sea shore cottage. Let’s assume he’s in an A Zone. His area doesn’t really get a whole lot of water. His home is so low as far as the first floor elevation. What’s going to happen there?
Bill – They were using a 1929 datum on those maps. Now they’re moving to 1988 with the new maps. This will mean a negative 1’3” under elevation. If you have a 10 and ½ foot elevation…now you’re going to be at 9’3” elevation.
Jeff – Is the elevation you are referring to the lowest first floor habitable elevation?
Bill – The Base Flood Elevation in the areas where they want to see that lowest habitable floor. Some areas are 9’, which is where they say this is where it doesn’t flood. Some of The Gardens are in that area. You can start building that first floor at 9’.
Jeff – Everything starts from the Base Flood Elevation, meaning that’s the area…the land or the street area…the neighborhood?
Bill - Base Flood Elevation is where they project the 100-year storm will not flood. You’ll see houses on pilings or they’ll buildup the foundation a foot or two off of the ground because the ground is at 8’ to get to that 10’ or 11’. They’ll raise it up a little.
Jeff – They’re going to look at the Base Flood Elevation, then determine the lowest floor elevation? Is that what we’re talking about here?
Bill - The lowest floor elevation for rating your Flood Insurance is wherever equipment or that lowest piece of equipment is under the floor joists. That is where they’ll rate the insurance in an A Zone.
Jeff - If somebody is 1’ above, with the new maps and everything that’s going on, how is that going to affect rates? Is there going to be much affect at all?
Bill - The maps are still advisory…so they’re going to change. They didn’t complete a Wave Action in there. They rushed these out to help the state of New Jersey rebuild as best as they could. We’re supposed to get new map revision in August 2013. That’s when these maps were supposed to come out. And that will have additional detail. Houses that are showing on this new advisory map that are in the V zone now….those zones will change. FEMA has told us they usually come out with very conservative maps for us. They always want to give the worst possible news. They don’t want to come back and change it, saying that they have to make it worse than they originally thought. They want to move back and say it’s better than they thought. That makes sense…when you think of the fiscal cliff at the end of the year. We were all worried about what was going to happen, and it didn’t turn out to be as bad as we thought it was going to be.
Finding Your Base Flood Elevation
Jeff - Where does a homeowner start to find out what their current elevation is, and whether they are in the V zone or the A zone on the new advisory maps?
Bill - There are a couple of things you can do. You can look for your base flood elevation on your flood insurance certificate, if you have it. We try to keep as much of that information as possible in our office. There are a number of insurance agents in our office that will be happy to walk you through it and give it to you. They will show you where the base flood information is located on the certificate. You do not need to be our customer. We’ll gladly help you understand the information…that’s what we’re here for!
The other thing people want to look at right now is the Region 2 Coastal map which stands for FEMA 2’s Region (that’s the region we’re in) and the number 2 Coastal. You can find the new Advisory Flood Maps. It’s really neat! You can plug in your address and they will dial in and give you what information they have right now. Again, those maps are changing.
Increased Cost Compliance Coverage
Jeff - The link is provided in the blog. Please click on the link, enter your address, and it will tell you exactly which zone you’re in.
What are the options for somebody today that has a small single family home in a V zone? We’re being told that the federal government wants these homes raised up. What happens if these homeowners don’t raise their homes up? Are these flood insurance premiums going to be way through the roof?
Bill – The writing is unfortunately on the wall. They are going to raise the rates. The opportunity here if you had a small beach cottage in Ocean City that did receive substantial damage, your insurance policy does have up to $30,000 under Increased Cost Compliance Coverage. It’s built into the policy. If you had greater than 50% of the assessed value of the house destroyed, you can file a second claim. Go to the city first to get a letter saying you received more than 50% of substantial damage during the storm. Come into our office to show us your letter. We file a second claim. They’ll pay to help elevate. If you want to demo your property, they’ll pay the demo. They’ll pay for new pilings or stringers for the new property to help elevate the building and get it out of harm’s way.
Jeff – As far as a Condominium Policy for two-unit condos, whether they are in a V zone or A zone or whichever zone they may be, you have a Homeowners Policy and Flood Insurance Policy split between two owners. Will these premiums go up on condominiums as well? Does it all depend on the elevation?
Bill – In the program, unfortunately, all the premiums are going to be going up. It’s a matter of where they’re going up. Some are going to see more substantial increases than others. The program is out of money. It’s been out of money, so the premiums are going to be going up.
Jeff – Are there any other questions that you’re receiving right now that I haven’t asked, that the homeowners need some answers to?
Bill – One of the concerns is the Biggert-Waters Act. That’s the Act that’s signed to extend the Flood Insurance Program for five years. In there, if you’re a secondary homeowner, and you’re Pre-FIRM, meaning your house was built before 1974, and you’re not up to the flood codes, we’ve been told you’ve always been subsidized, believe it or not. Those premiums are over $2,000 – that’s a subsidized rate. Those numbers are going to be going up for those owners 25% a year until they get actuarial rates. They’re saying over the next five years they expect increases. Give us a call if you would like to get into more detail.
Jeff – I can tell there’s going to be a lot of different questions that come up specific to each homeowner and the property they have. I’m just trying to get some general information.
I’m going to bring in Brad from my team over here who’s a homeowner. We talked about his property in The Gardens. He had a couple of questions. Hopefully you will hear answers to your questions.
Where Can You Go For Help?
We’re here to help you. You can e-mail back and forth – we’re always answering. There’s myself and four other siblings right now in the business. We have a staff of over thirty, above and beyond the McMahons in the office. We’re all more than willing to help you with any of your questions.
You may call 609-399-0060 or e-mail me at billm@mcmahonagency.com.
Jeff – Where does your agency service? Tell everybody which areas you cover.
Bill – We specialize in the coast. We can do anything on the coast. We know the coast. We have all the markets. Now more than ever it’s very important. Where we’re successful after the storm is that we have all the contacts with the insurance companies. The flood insurance company was in our office for three weeks. We had a guy in our office able to help us take in the claims…putting them in because we have buying power. Buying power is everything. Because we’re in Ocean City, we do a ton of Flood Insurance. We do it all the way down to Cape May County, we go all the way up into Monmouth County writing Flood Insurance. We had a huge book, and it really helps. We were able to get adjustors as quick as possible.
Jeff – Any questions? Give Bill a call or send an e-mail. Any questions for me or any comments, make them here at 609-398-5333 or jeff@jeffquintin.com. We’ll respond back to you as soon as possible. And, as always, I appreciate your watching, and always look forward to our conversation being the best of your day. Have a great one!
Helpful Links
* Find the elevation of your home. Most property owners in Ocean City should have a flood elevation certificate if they have flood insurance. Check to make sure it's not expired.
* Find the elevation required for your home under the new FEMA flood map. Search for your Advisory Base Flood Elevation by address. http://www.region2coastal.com/sandy/table
* See how your advisory elevation compares to Hurricane Sandy flood levels. Read the left column (NAVD 1988 datum) on the attached PDF (click on the PDF icon above). Make sure the flood elevation on your certificate uses the same NAVD 1988 scale as the ABFE maps (or see how the scales compare). The center column (NGVD 1929 datum) is the scale that appears on most flood elevation certificates in Ocean City. (Check the current tide level on the NAVD 1988 scale in real time. http://waterdata.usgs.gov/nj/nwis/uv/?site_no=01411320
* What if your home remains below the required elevation? One thing appears certain: Your flood insurance premium will increase (because federal taxpayers will no longer subsidize the flood insurance program).
* http://oceancity.patch.com/articles/elevating-homes-after-sandy-wait-and-see-approach-is-prudent?ncid=newsltuspatc00000001
Watch on your mobile device >>
Today I have a very special guest that’s joined us. This is Bill McMahon from the McMahon Agency here in Ocean City. They are the leading insurance agency in town, doing a majority of the insurance in Ocean City and along the coast here at South Jersey.
Bill is here today to share with us some of the concerns, thoughts, and questions that are being asked with regards to all this information…all these things happening here at the Shore regarding Flood Insurance, Homeowners Insurance, and everything else as far as how it’s affected all of us here.
If you have any questions, thoughts, or comments, please e-mail me at the bottom of this blog. We’ll get the answers right back to you. We may not cover everything today, as this is a frequently asked questions overview.
The Biggert-Waters Flood Insurance Reform Act of 2012
Jeff – Bill, go ahead and give our viewers your contact information. If anyone has any questions directly with you.
Bill – I may be contacted at the McMahon Agency, phone number 1-800-448-6340. We’ll be happy to answer all your questions. We have three departments in our agency: Commercial Lines, a very good Condominium department, and Personal Lines department.
There are a lot of things going on at the Shore...there are a couple of things that have happened. There was a new law enacted by Congress. The Biggert-Waters Act was signed. The good news is that the law included a five year extension of the National Flood Program. There are a lot of changes. The problem with the program is that it’s broke. It was broke after Katrina. Superstorm Sandy put it further in debt. What we’re seeing in that lull was to get some Rate One properties because the program is so far in debt. They need to make up the money.
Advisory Based Flood Maps
The second thing happening in New Jersey after Sandy is that we were in a remapping for all of New Jersey for the flood maps. The flood maps were dated. We were told they were about thirty years old, and they needed to be updated. They were 90% completed in updating those maps when the storm hit. They wanted to get these maps out as quickly as possible to help the people rebuild.
Jeff – We’re talking about these new flood maps. Is that what they are talking about when they say “Advisory Based Flood Maps?”
Bill - Yes, they are Advisory Maps. On January 24th the Governor said to use those maps as law for rebuilding and elevating. In Ocean City we were very lucky. As much of the damage we see here in our town, we were spared the worst. If you go up in Monmouth County, Long Beach Island...they really got nailed. There are complete islands gone. They need to be completely rebuilt.
The Governor acted and said to use these maps as a basis. They’re going to be the future. If you’re building now, use them. There are some properties in Ocean City that need to come down because the damage was too great from the storm. We’re being told they need to use these maps. The rest of us…they’re Advisory Flood Based Maps which are not complete.
They rushed these maps out at 90% complete. One of the things in the maps they did not take into consideration yet, is a study on the Wave Action and how it hits the island with intervening structures, meaning dune systems and on the bulkheads on the bays. These are raw maps. The V Zones that you see on the maps now can be changed later.
V Zone and A Zone
Jeff – What does V Zone and A Zone mean?
Bill – V Zone stands for Velocity Zone. To be in a V Zone, a house on that area of the island can take a greater than 3’ wave. That wave can be created by water or created by the wind, making the water higher. If you only have 16” and the wind gets that up to over 36”…it can happen…then that’s how you get a greater than 3’ wave. The National Flood Program said a wave at 18” can cause substantial damage to a property.
In the A Zone, they’re going to take less than a 1’ wave. The A Zone is basically rising water, and it’s more prone than their V Zones and there on the mainland or areas that are not likely to flood. The A Zone is more likely to take rising water.
Jeff – Would every bay front home or every beach front home on all the islands be considered a V Zone? Or, is it true that some zones, you could be on the beach, and you have a big dune, but not be in a V Zone?
Bill – A lot of Ocean City, in the new Advisory Flood Maps, are in the A Zone because the last street to flood in Ocean City was Central Avenue. That’s the exit out of town and is close to the beach. It did not look like there was a lot of damage driving down Central Avenue right after the storm. The front part of Ocean City is actually a very high part of this island, so it is in an A Zone.
Base Flood Elevation
Jeff – How do the new maps affect current insurance policies? We’re going to bring Brad into my office shortly. Brad has a single family home in The Gardens. It’s 60-70 year old home…built in the 40’s or 50’s. Great area, but his home is not elevated. He has a front porch like an old sea shore cottage. Let’s assume he’s in an A Zone. His area doesn’t really get a whole lot of water. His home is so low as far as the first floor elevation. What’s going to happen there?
Bill – They were using a 1929 datum on those maps. Now they’re moving to 1988 with the new maps. This will mean a negative 1’3” under elevation. If you have a 10 and ½ foot elevation…now you’re going to be at 9’3” elevation.
Jeff – Is the elevation you are referring to the lowest first floor habitable elevation?
Bill – The Base Flood Elevation in the areas where they want to see that lowest habitable floor. Some areas are 9’, which is where they say this is where it doesn’t flood. Some of The Gardens are in that area. You can start building that first floor at 9’.
Jeff – Everything starts from the Base Flood Elevation, meaning that’s the area…the land or the street area…the neighborhood?
Bill - Base Flood Elevation is where they project the 100-year storm will not flood. You’ll see houses on pilings or they’ll buildup the foundation a foot or two off of the ground because the ground is at 8’ to get to that 10’ or 11’. They’ll raise it up a little.
Jeff – They’re going to look at the Base Flood Elevation, then determine the lowest floor elevation? Is that what we’re talking about here?
Bill - The lowest floor elevation for rating your Flood Insurance is wherever equipment or that lowest piece of equipment is under the floor joists. That is where they’ll rate the insurance in an A Zone.
Jeff - If somebody is 1’ above, with the new maps and everything that’s going on, how is that going to affect rates? Is there going to be much affect at all?
Bill - The maps are still advisory…so they’re going to change. They didn’t complete a Wave Action in there. They rushed these out to help the state of New Jersey rebuild as best as they could. We’re supposed to get new map revision in August 2013. That’s when these maps were supposed to come out. And that will have additional detail. Houses that are showing on this new advisory map that are in the V zone now….those zones will change. FEMA has told us they usually come out with very conservative maps for us. They always want to give the worst possible news. They don’t want to come back and change it, saying that they have to make it worse than they originally thought. They want to move back and say it’s better than they thought. That makes sense…when you think of the fiscal cliff at the end of the year. We were all worried about what was going to happen, and it didn’t turn out to be as bad as we thought it was going to be.
Finding Your Base Flood Elevation
Jeff - Where does a homeowner start to find out what their current elevation is, and whether they are in the V zone or the A zone on the new advisory maps?
Bill - There are a couple of things you can do. You can look for your base flood elevation on your flood insurance certificate, if you have it. We try to keep as much of that information as possible in our office. There are a number of insurance agents in our office that will be happy to walk you through it and give it to you. They will show you where the base flood information is located on the certificate. You do not need to be our customer. We’ll gladly help you understand the information…that’s what we’re here for!
The other thing people want to look at right now is the Region 2 Coastal map which stands for FEMA 2’s Region (that’s the region we’re in) and the number 2 Coastal. You can find the new Advisory Flood Maps. It’s really neat! You can plug in your address and they will dial in and give you what information they have right now. Again, those maps are changing.
Increased Cost Compliance Coverage
Jeff - The link is provided in the blog. Please click on the link, enter your address, and it will tell you exactly which zone you’re in.
What are the options for somebody today that has a small single family home in a V zone? We’re being told that the federal government wants these homes raised up. What happens if these homeowners don’t raise their homes up? Are these flood insurance premiums going to be way through the roof?
Bill – The writing is unfortunately on the wall. They are going to raise the rates. The opportunity here if you had a small beach cottage in Ocean City that did receive substantial damage, your insurance policy does have up to $30,000 under Increased Cost Compliance Coverage. It’s built into the policy. If you had greater than 50% of the assessed value of the house destroyed, you can file a second claim. Go to the city first to get a letter saying you received more than 50% of substantial damage during the storm. Come into our office to show us your letter. We file a second claim. They’ll pay to help elevate. If you want to demo your property, they’ll pay the demo. They’ll pay for new pilings or stringers for the new property to help elevate the building and get it out of harm’s way.
Jeff – As far as a Condominium Policy for two-unit condos, whether they are in a V zone or A zone or whichever zone they may be, you have a Homeowners Policy and Flood Insurance Policy split between two owners. Will these premiums go up on condominiums as well? Does it all depend on the elevation?
Bill – In the program, unfortunately, all the premiums are going to be going up. It’s a matter of where they’re going up. Some are going to see more substantial increases than others. The program is out of money. It’s been out of money, so the premiums are going to be going up.
Jeff – Are there any other questions that you’re receiving right now that I haven’t asked, that the homeowners need some answers to?
Bill – One of the concerns is the Biggert-Waters Act. That’s the Act that’s signed to extend the Flood Insurance Program for five years. In there, if you’re a secondary homeowner, and you’re Pre-FIRM, meaning your house was built before 1974, and you’re not up to the flood codes, we’ve been told you’ve always been subsidized, believe it or not. Those premiums are over $2,000 – that’s a subsidized rate. Those numbers are going to be going up for those owners 25% a year until they get actuarial rates. They’re saying over the next five years they expect increases. Give us a call if you would like to get into more detail.
Jeff – I can tell there’s going to be a lot of different questions that come up specific to each homeowner and the property they have. I’m just trying to get some general information.
I’m going to bring in Brad from my team over here who’s a homeowner. We talked about his property in The Gardens. He had a couple of questions. Hopefully you will hear answers to your questions.
Where Can You Go For Help?
We’re here to help you. You can e-mail back and forth – we’re always answering. There’s myself and four other siblings right now in the business. We have a staff of over thirty, above and beyond the McMahons in the office. We’re all more than willing to help you with any of your questions.
You may call 609-399-0060 or e-mail me at billm@mcmahonagency.com.
Jeff – Where does your agency service? Tell everybody which areas you cover.
Bill – We specialize in the coast. We can do anything on the coast. We know the coast. We have all the markets. Now more than ever it’s very important. Where we’re successful after the storm is that we have all the contacts with the insurance companies. The flood insurance company was in our office for three weeks. We had a guy in our office able to help us take in the claims…putting them in because we have buying power. Buying power is everything. Because we’re in Ocean City, we do a ton of Flood Insurance. We do it all the way down to Cape May County, we go all the way up into Monmouth County writing Flood Insurance. We had a huge book, and it really helps. We were able to get adjustors as quick as possible.
Jeff – Any questions? Give Bill a call or send an e-mail. Any questions for me or any comments, make them here at 609-398-5333 or jeff@jeffquintin.com. We’ll respond back to you as soon as possible. And, as always, I appreciate your watching, and always look forward to our conversation being the best of your day. Have a great one!
Helpful Links
* Find the elevation of your home. Most property owners in Ocean City should have a flood elevation certificate if they have flood insurance. Check to make sure it's not expired.
* Find the elevation required for your home under the new FEMA flood map. Search for your Advisory Base Flood Elevation by address. http://www.region2coastal.com/sandy/table
* See how your advisory elevation compares to Hurricane Sandy flood levels. Read the left column (NAVD 1988 datum) on the attached PDF (click on the PDF icon above). Make sure the flood elevation on your certificate uses the same NAVD 1988 scale as the ABFE maps (or see how the scales compare). The center column (NGVD 1929 datum) is the scale that appears on most flood elevation certificates in Ocean City. (Check the current tide level on the NAVD 1988 scale in real time. http://waterdata.usgs.gov/nj/nwis/uv/?site_no=01411320
* What if your home remains below the required elevation? One thing appears certain: Your flood insurance premium will increase (because federal taxpayers will no longer subsidize the flood insurance program).
* http://oceancity.patch.com/articles/elevating-homes-after-sandy-wait-and-see-approach-is-prudent?ncid=newsltuspatc00000001
Wednesday, February 13, 2013
Negative Cash Flow Vs. Future Appreciation
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A question that is on the minds of many investors these days is whether or not they should wait to sell their property or keep on carrying the property through year after year in the hopes that it will appreciate. The best way to evaluate this is to put scenarios on paper and compare.
Let’s consider a property that was purchased somewhere in 2005-2007, for a price tag of $400,000. Assuming a 20% down payment the amount owed today is $300,000, leaving a monthly payment of about $2,300. This equals $28,000 each year in mortgage payments. Even after factoring in the annual net rental income of $13,000, your negative cash flow each year to carry the property is $15,000.
Here are two scenarios to demonstrate how this would pan out if you chose to sell now or wait for appreciation.
What Happens If Selling Now?
With the market having come down, the home that was worth $400,000 in 2007 is likely worth $230,000 today. Factoring in the selling expenses, the net proceeds from the sale will be roughly $215,000, leaving you $85,000 upside down on what you owe on the property. The question to ask is, “do I want to spend $15,000 each year to maintain this asset to one day be able to get out of it?”
How Does Selling Five Years Later Look?
Let’s say you choose to wait for five years in the hope that the market will appreciate and you can recover your initial investment. Keeping in mind that you will have an annual negative cash flow of $15,000 totaling $75,000, in order to break even on your investment you would need to sell the home for $430,000. This would yield $400,000 after selling expenses.
Remember, the market would need to appreciate by 50% in order to reach this goal – that’s 5% each year, which is a possibility only assuming a strong market. Market appreciation of 10% in each of the next five years seems unlikely at the moment.
Assuming that we did have a 10% yearly appreciation, even then it would only bring up the value of your home to $290,000 but you would still need to sell at $430,000 to break even. All the while, your annual negative cash flow continues as your resources continue to be drained.
~
At the end of the day, you need to ask how long it will take for the market to come up to where you can sell your home for $430,000 when your property’s value today is $230,000. And in the meantime, are you willing to continue draining your financial resources to upkeep the home?
In my opinion, if you were going to throw $15,000 toward an asset every year, you would want it to appreciate accordingly so you can break even.
Based on this example, you can see that there would be two viable options for investors in this situation today:
1. Bring money to the table and sell the property today.
2. Sell it as a short sale, getting the lender to accept less based on today’s value.
If you would like to discuss your specific situation, feel free to call us today – we’ll be happy to go through the numbers and work out possible solutions.
Thursday, January 24, 2013
Jeff Quintin's 2013 Real Estate Predictions
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Click here to see Jeff's predictions from 2012 >>
We’ve been watching the market for a few years now with so much rollercoaster activity – and each year our marketplace gets stronger and stronger. Here we are in 2013 and I can say that the next 11+ months are slated to be even better than the previous year. Here are my predictions for what I expect to happen in the coming months and year.
Home Prices Will
Rise Even More
We
saw prices fluctuate considerably over the past several years within our
marketplace. We can expect home prices to rise more so in some areas than
others. Another factor is that we will see a lot more cash buyers and with
fewer lenders involved, we can expect appraisals that are truer to actual
values.
Resale Inventory Continues
to Dwindle
With
each year of historically low interest rates we will continue to see lower inventory
levels across the board. Along with that we will also see a continued increase
in sale prices, higher demand and a lot more move-up buyers.
New Construction
Makes a Comeback
With
developers’ company stocks on the rise and consumer confidence getting stronger
we can expect more and more new builds to pop up. In fact, developers are
purchasing land at lower prices allowing them to pass on those savings to the
end client.
Government Programs
Continue to Support the Housing Industry
The
cornerstone of a recovering market is creating leeway for those in distress.
Now that the fiscal cliff crisis is resolved in several areas (spending cuts
are yet to be discussed), distressed homeowners can expect to receive relief
from government programs such as HAMP, HAFA and other loan modification and
foreclosure alternative programs.
Mortgage Debt
Forgiveness Relief Act Extended
When
writing these predictions, it had not yet happened but the government has since
extended this important tax relief act that allows homeowners that have gone
through a short sale to be forgiven tax liability on the otherwise considered
taxable income. As of now, the Act has been extended through December 31, 2013.
Foreclosure Review
Program Will Reveal Fraudulent Activity
We
will see increased cases of program abuse and fraud when it comes to the
government foreclosure review program. Irresponsible lenders that took
advantage of unsuspecting borrowers will start to come to the surface in 2013.
Banks Will Favor
Short Sales to Foreclosures
With
the significant costs involved with pursuing foreclosures, banks will
increasingly prefer short sales to foreclosures. Shorter time periods, a
seeming win-win situation for all and a greater boost to the housing industry
are all reasons this will be a recipe for success in terms of distressed
properties.
National MLS Might
Be Coming Soon
With
the large national property websites that house public records and outdated
records, we are seeing more and more interest build in a national MLS that
would cater to buyers in all areas.
Real Estate
Licensing Bar Will Be Raised
Anyone
from down the street can go and get a real estate license. But with the bar
raised, we can expect more and more formal requirements and restrictions in
order to obtain a license to practice real estate.
Multiple Offers
Will Create Bidding Wars
With
the heightened interest and demand, sellers will be able to creatively list
their homes priced about 10% lower than actual market value. This creates about
60% more buyers viewing the property, resulting in more offers that result in a
bidding war.
~
If
you want more information on any of these predictions or if you would like to
discuss your real estate goals – contact us today. We look forward to hearing
from you!
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