ABC's of Buying Florida Real Estate

Florida Luxury Home Sales Are Bargain Priced for Those with Cash

    The mortgage crisis that impacted the Florida real estate market has had an enormous effect on an unexpected sector of the market - Florida luxury homes and condominiums.

    In the past, banks and mortgage companies packaged up mortgages they had closed and sold them off as investment portfolios, but there are currently few investors willing to buy such packaged mortgage portfolios.

    Thus, mortgage providers that normally write "jumbo" loans (mortgages above the limits set by Fannie Mae, Freddie Mac and Ginnie Mae) on luxury homes and condominiums are now having to keep those loans on their own books but they are reluctant to add to their current in-house mortgage portfolios. Another problem is that the maximum loans that Fannie and Freddie can grant is being lowered at the end of this year. To compensate themselves for accepting this extra risk, banks are now charging higher interest rates on the types of "jumbo" loans normally written for luxury home and condominium sales. This reluctance is having a depressing effect on the sale of luxury homes and condos throughout Florida and the United States.

    According to Andree Huffine a realtor with RE/MAX Alliance Group in Sarasota, the problem is particularly troublesome in places like MIami, Fort Myers and Sarasota where there is a large inventory of homes and condos in the $500,000 - $1 million and up price range for sale.

    "Owners of Sarasota luxury homes and condos who need or want to sell their luxury homes and condos are beginning to understand the situation and have started reducing their asking prices substantially," says Bob Henley, a respected Sarasota real estate expert. "They are also showing more willingness to consider lower price offers from cash buyers to avoid the risk of deals that are contingent upon appraisals and financing approval," he says. As a result, those with cash on hand are able right now to purchase a Florida luxury home or condo at a really attractive price.