In today’s Tallahassee Real Estate Market as you may know very well there is much much more inventory on the market then there are home buyers! This is even more salient when you’re considering selling a luxury home in Tallahassee. When selling your home it is very difficult to remove the emotional aspect from the equation. However this is necessary! One must consider that buyers in today’s market do not care about the personal situation of any particular seller. Buyers do not care about how much money a seller will be bringing to the closing table. Buyers do not care about the family kinship that people may have with the home. Buyers consider one thing and one thing only: is this the best house that I can get for the lowest amount of money?
Buyers know that there is many more homes for sale in Tallahassee then there are buyers! Therefore, when you’re selling your house you must price your house according to what the selling market says. Not what your neighbor has priced their house at but what your other neighbors have SOLD their house at! In today’s market, you must have your house priced at the lowest point in the selling market and it must be in the best condition! Or it will not sale!!!!
Luxury homes in Tallahassee are difficult to sell only because people are uneducated as to how to sell them!
JOSHUA S. CUMMINGS, Realtor
Executive Vice President
Pro Players Realty
3501 Martin Hurst Road
Tallahassee, Florida 32312
As Tallahassee investors seek safety against a falling dollar and declining stock market, annuities are an option increasingly explored by fearful investors but are annuities all they are cracked up to be? Let’s take a few minutes to compare and contrast annuities versus short sales to see which makes the most sense.
An annuity is essentially an insurance product that pays an income for a specified period of time. In a nutshell, you hand over a lump sum and/or regular contributions to an insurance company that is able to use and invest that money in exchange for a guaranteed payment in the future.
Reward vs. Risk
The “reward” portion of an annuity is the ability to secure a reliable, steady source of income outside of your ability to work. This is one reason it is a popular option among retirees or others seeking “safety” from the prospect of outliving their ability to work without having to depend solely upon Social Security.
While superficially this sounds like a great idea, the actual reality is often not quite as advantageous as it may initially sound. This is due to several reasons including the inherent risk associated with dealing with an insurance company (indeed, nearly any company) over an extended period of time. If the near default and subsequent bail-out of AIG didn’t teach investors anything it certainly highlighted the potential for insurance companies to take on more than their ability to pay and remain solvent. While the AIG fiasco did not directly concern individual insurance contracts, the basic premise remains the same…there is a risk associated with total reliance upon a company over an extended period of time.
Unfortunately, this is not the only risk. The risk versus reward ratio in terms of actual returns falls short especially given the ultra-low interest rates in the current market. For example, consider the following example where you invest $100,000 into an annuity paying an annual interest rate of 5% for 30 years (roughly the same period of time you would finance an average mortgage). Annuity Payments ($ / Year). The annuity would pay roughly $6,200 per year or just over $500 per month for placing $100,000 in cash at their disposal. At the end of 30 years you would have zero remaining – nada, nothing, zilch. Unfortunately, during that same period of time, the $6,200 would have lost value due to inflation; in fact, if inflation follows a historic average, that same $6,200 annually would be worth just about $2,000 in purchasing power.
Now, Tallahassee real estate agents, let’s see what happens if you were to purchase just one Tallahassee short sale property for $100,000 cash. You rent it out for 30 years and make the exact same $500 per month or $6,200 (remember, No mortgage!) plus you have tax write-off’s for depreciation. For 30 years you collect the same amount of money but at the end of 30 years instead of the payment stopping leaving you with absolute nothing…you still own a Tallahassee paid-in-full, income generating property. Since Tallahassee real estate tends to keep pace with inflation, that same $100,000 property will be worth roughly $300,000 using standard historical estimates. Now, ask yourself one simple question…which would you rather own in 30 years? An annuity controlled by someone other than yourself that leaves you empty handed or a paid-in-full property that continues to generate income as long as you own it? Call us crazy but seems like short sale real estate is a clear winner.
See you at the top!