Price Inelasticity: Here's A New Explanation For The Housing Slump

Normally, when a property isn't selling and it has been well-marketed, reducing the price is an almost sure-fire way to excite buyer interest and bring an offer.

Over the last few months, residential sellers have been lopping off big chunks of their asking prices and still not getting any interest from buyers. It's really discouraging!

Real estate agents have been at a loss as to why price reductions coupled with aggressive marketing are not bringing more offers.

Perhaps the reason is a concept called Price Inelasticity.

James Thorner has written a story about price inelasticity in his "(Un)Real Estate" column in the St. Petersburg Times for Monday, October 29th, and it is absolutely worth reading if you are a real estate agent or home seller.

According to Thorner, price inelasticity means that buyers are not responding to price reductions when normally they would. No one would argue with that about today's real estate market, and it appears that economists actually have a name for this situation.

The question is, why aren't people responding to lower prices?

If you read-up on price elasticity on Google.com, it states in a round-about manner that people don't respond to lower prices because other forces are at work which keep the overall costs of ownership too high. They give the example of owning a car. Even if dealers lower the price of new cars, other factors may combine to keep people from purchasing them. Presumably these other factors might be a lack of parking spaces, high insurance rates, high loan rates, high maintenance costs, gasoline prices and many other factors all associated with auto ownership.
In such cases, people won't respond to lower car prices because the associated costs remain too high. So, dealers can lower the prices but they still won't sell many cars. Blame it on price inelasticity.

Might this also be the case with real estate? Might it not also be that if you lower the cost of the house, the other costs associated with home ownership remain too high, thus making the house unattractive at any price?

For many months now, readers of this blog have been exposed to my theory that the "stars are out of alignment". The stars, as you know, are the cost of real estate, the availability of mortgage funds, property taxes and property insurance. Just like the associated costs of automobile ownership, these costs associated with property ownership remain too high and people simply are not buying -- no matter how low the asking price of the property. In other words, price inelasticity brought about by outside factors associated with ownership.

So you see, price inelasticity may indeed have as much to do with the costs associated with ownership as it does with the asking price of the item. It's the total or overall cost of ownership that has real estate buyers concerned today, and simply lowering the asking price of the property may not be enough of an incentive to bring buyers back into the market.

So, let's all hope that the bankers, legislators and insurance executives can find a way to reverse today's price inelasticity. It appears to me that most sellers are doing their part.

For more information on real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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It's Home Tour Time Again In Gulfport And Historic Kenwood

Two of Tampa Bay's premier neighborhood home tours are headed your way ...

BungalowFest ... This is Historic Kenwood's big show and will be held the evening of Friday, November 2nd and all day Saturday, November 3rd. Friday starts off with the popular "BungalowFest by Moonlight" evening tour of five homes from 7 to 9 PM. Tickets for the event are $15. The Saturday tour is from 10 AM to 3 PM and includes tours of 15 homes; the cost is $10. A combination ticket is $20. Advance tickets can be obtained at Craftsman House Gallery, 2955 Central Avenue or by calling 727-323-2787. Tickets will also be available on tour evening and day at Seminole Park, 300 29th St. N.

Pink Flamingo Tour of Homes ... The fourth annual Gulfport tour of homes, this year entitled "Sail Thru the Years", will be held from 10 AM to 5 PM on Saturday, November 3rd. Tickets for the tour will be available on tour day for $10 at the Gulfport Historical Museum, 5301 28th Avenue S. You can get more informtion by calling 727-344-3711.

I've been to both of these tours several times, and if you enjoy seeing lovely homes this is definately a great way to spend a day -- don't miss either of them!

For more information on real estate matters in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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Buyers Are Going To Lose Their Negotiating Power

On October 9, 2007, I wrote a blog article called "Seller's Are Losing Their Negotiating Postion". Right now, buyers have all the power.

But buyers need to beware of this: When the market "bottoms out" -- and it will, we just don't know when -- buyers will quickly lose their position of strength for negotiating real estate prices and terms.

Someday, the St. Petersburg Times, the Tampa Tribune, CNN, ABC, Fox, and all the other media will all be running stories that tell about real estate's remarkable and rapid comeback. They'll have experts saying that the bottom was reached thirty days ago and now's the time to buy and blah, blah, blah. Gurus are always gurus a month after something happens -- have you noticed that?

Well, if you're a buyer, here's what is going to happen to you when the bottom is reached. Frustrated fellow buyers are going to come out of the woodwork. There's going to be a lot of pent-up demand for housing. Buyers are going to gobble up the immediate "good values" and cut into the available inventory in a big way.

Seeing that real estate activity is heating up once again, sellers are not going to be so anxious about the sale of their property. They aren't going to drop their prices and let buyers name their own terms like they will today. Once that bottom is reached, you as a buyer are going to find yourself in a weakened negotiating position. Your position will grow weaker every single day that the real estate market is rebounding as sellers begin to retake the higher position in each transaction. It probably won't be too long after the market bottoms-out that sellers once again hold the upper hand and will wait for the next offer to come along.

You think I'm wrong? You think that won't happen? Did you try to negotiate a low price and favorable terms with any sellers during, say, 2003 or 2004? How much success did you have? Be honest about your answer, because I already know how much success buyers were having negotiating with sellers back then. They were so successful in their negotiations that the only way you could buy a house was to bid up its value and pay more for it. Remember?

If you're a buyer, the time to buy is RIGHT NOW. Sellers are anxious. Motivated. Desparate. Willing. Nervous. Going broke. Pick your descriptive adjective. The point is that you can practically name you're own price in some cases.

This is a situation that is fluid. It can change the minute, the second, the nano-second the market reaches "bottom-out" mode and starts to climb back up. Those changes will weaken and then destroy the buyer's ability to neogiate favorable price and terms on many properties.

My suggestion to buyers? Buy now while you still have some negotiating leverage.

For more informtion on real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

Buying Up In A Down Market -- A Great Idea For Buyers

Here's some good advice for buyers: when the market for real estate is falling, it's a great time to buy a more expensive property. It's called "buying up in a down market", and its something sophisticated real estate buyers do during cycles like this when real estate prices are falling.

Here's how this works and why its a good idea.

When most people buy a new home, they generally pay 50-percent more for it than the amount they sold their old home. Let's say your current home is valued at $300,000. Most likely you'll buy-up to a home costing around $450,000.

Let's also assume that real estate prices are falling. Right now, the St. Petersburg Times says median prices have fallen 9.5-percent for the year ended September 30, 2007. To make the math easy in this example, let's round up to a 10-percent annual drop in median prices.

If you sold your home for it's peak value, it would sell for $300,000; and the house you want to buy at its peak is $450,000. So the difference is $150,000, and you'd have to come up with that additional amount of money.

But since real estate prices are falling, you delay your purchase. While you wait, the value of your property falls by the aforementioned 10-percent to $270,000.

This means that the new house you want is now well past the 50-percent value increase that is the average in move-up situations. You may think that the house is now beyond your means and totally out of reach.

Not so fast!

The value of that new home dropped right along with your home's value. That's generally the way market fluctuations work -- everybody suffers equally. So now, that new house is valued at only $405,000. If you do the math, you'll see that the difference between the new house and your hold house is now only $135,000. So instead of having to come up with an addtional $150,000 you need only find an additional $135,000. Thus you saved $15,000 thanks to the falling price market.

So if you've been waiting for prices to get lower, well, I'd stop waiting and start buying right now. Sell your house for what you can get in the current market and buy that new house at today's lower prices. You'll probably end up paying less for the new house and pocket some savings.

But don't wait too much longer. I keep hearing buyers say they are waiting for the market to "bottom out". That's probably not a good strategy. It may be impossible to accuratly determine when the market will bottom out, and once it starts moving up again the good deals will be gobbled-up and you'll be left looking at higher prices and decreased inventory. You know the old saying: He who hesitates is lost.

You need to do what savvy buyers have done for years: Buy Up In A Down Market.

For more information on real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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Median Price Dips Again -- But What Does That Really Mean?

In the St. Petersburg Times for Thursday, October 25th, the main headline in the business section reads "Home prices tumble again" and the subhead is "The median price in the bay area for an existing home is poised to dip below $200,000".

What follows is a very well written article by Christina Rexrode about how the median price of existing homes has fallen 9.6% from September 2006 to September 2007 -- from $222,100 to $200,700. She goes on to urge sellers to reduce their prices if they hope to make a sale -- very good advice.

But what is the median price? What does median mean, anyway?

Probably a lot of people confuse median with average, but they are not the same thing.

Recalling that troublesome course in statistics that I took in college, the median is the number separating the higher half of a sample from the lower half. I find it useful to think of the median as the half-way point. Clearly, that is different than an average.

So, when we talk about the falling median price of homes, what we are really saying is that people are buying less expensive homes and not buying more expensive homes. In the current case, half the people who bought houses paid $200,700 or less and the other half paid $200,701 or more. A year ago, half paid $222,100 or less and the other half paid $222,101 or more.

So today, buyers are purchasing less expensive properties. That's a market fact supported by the median data. What it does not necessarily mean is that they could have bought the same property today for 9.6-percent less than they did a year ago.

So, if you're a seller, here's what all this means to you in selling your property: you had better start thinking in terms of getting your price lower. The falling median data supports a drop in asking prices. Or, as the Times staffer wrote in her story, "As sales continue to plummet ... sellers are waking up to the fact that they'll have to lower their prices if they hope to get rid of their property. That's a point they didn't grasp last year."

Well, I don't know if sellers grasped it last year or if buyers were still willing to pay more for property then, but this year's falling median price clearly shows the direction buyers are headed and only an uninformed or unmotivated seller will continue to try to get "top dollar" or "maximum ROI" or "my number" when selling property today.

For more information on real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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Private Transfer Fees: A Bad Idea Whose Time May Be Coming Anyway

Blissfully minding my own business one evening this past summer, I happened into one of my favorite watering holes and ordered my usual glass of water. Unfortunately the bartender misunderstood me, and served me a glass of water with two olives in it.

"Wow," I exclaimed. "That's some of the best water I've ever tasted. What kind is it?"

"Gray Goose," he said.

"Boy, they make great water. I"ll have another."

My thirst quenched a bit, I found myself engaged in conversation with a couple who were also devout water-drinkers. The conversation went on about this-n-that until the man mentioned that they had just purchased a new home near Lake Tahoe, California. They described it as a stunning home where they plan to retire to get away from Florida's hurricanes.

"Of course, we had to pay an extra $7,000 Private Transfer Tax out there," he said. "We don't have those here, do we?"

Since I had never heard of a Private Transfer Tax as being part of any closing paperwork, I assured him that we did not. I told him it must be one of those California ideas that hasn't quite swept the country yet.

So, my water-drinking friend and his wife explained to me what a Private Transfer Tax is and why they didn't really like paying it. I'll leave out the four-letter words.

In case you haven't heard of a Private Transfer Tax, here's what it is -- and yes, it is one of those California things that might sweep east and take over the rest of the country.

A Private Transfer Tax is an unregulated fee that is charged to a buyer by a builder, although anybody can probably assess this fee including private home sellers. Originally, the Private Transfer Tax was designed to help California developers win support from environmental organizations who might otherwise oppose a new development. Developers agree to put a covenant in the deed of each property they sell which requires home buyers to pay a percentage of the selling price to a land trust, charity, environmental group etc.

Since the fee is part of the deed, it can not be reversed once it is in place. So, it lasts forever. Each time the property changes hands, the new owner will have to pay the Private Transfer Tax -- usually about 1-percent of the selling price, although fees of nearly 2-percent have been known to be charged.

My initial reaction to this can be summarized in two words: Legalized Extortion.

I've done a little checking and found out that there is a company in Florida that is helping private property owners place transfer fees on their own homes. I'm not going to tell you the name of this outfit -- why give them any publicity. The way they set this up, the money does not go to any charity or environmental group. The revenues become extra income to the selling household.

Now, here's the kicker. The people who support this legalized extortion say that it helps reduce property prices. They say sellers generally reduce the selling price by the amount of the tranfer fee. This, they contend, reduces the debt load for the buyer and makes the house easier to sell.

Sure.

But what happens in the case where a seller does not reduce his price by the amount of the Private Transfer Tax? Well, then the buyer has to pay more to get into the house.

If this kind of thing becomes common, the Florida legislature needs to make an effort to regulate the practice. Monies raised from this kind of thing need to be earmarked only for charitable and environmental use, not pocketed by the seller. There needs to be a cap on the amount of the fee -- nothing more than 1 percent and probably a lot less. And there needs to be a sunset clause in the deed that brings an end to the transfer tax after a specific period of time -- say 10 years or three sales, whichever comes first.

Look, I've been a real estate agent and a water drinker for a long, long, time. And I know two things. First, anytime a buyer has to bring additional money to the closing table for whatever reason, real estate gets harder to sell. Private Transfer Taxes will make real estate harder to sell. Second -- and this is earth-shattering news that may shock you -- that Gray Goose company does not make water!

For more informtion about real estate in the Tampa Bay area, please visit my website at http://www.thestpeterealestatesite.com/.

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A 3-Month Retrospective: Re-Considering The V-Shaped Recovery Curve

Last July, I wrote an article explaining a projected real estate recovery scenario for the Tampa Bay area developed by Moody's Economy and published in Forbes Magazine.

This recovery model suggested that our area would have a V-shaped recovery curve. A V-shaped curve calls for a fast market fall, followed by a market that bottoms out quickly, and then a fast and strong climb back to a normally active market. The chart of such activity looks like a "V", as you can imagine.

Moody's based this model on their opinion that our market had two things going for it:
1. The strength of the local economy;
2. Subprime mortgage lending was relatively low here.

They blamed the problems in our real estate market on overactive real estate speculators who drove prices up to unsustainable levels. Moody's further predicted that the unsold inventory of property here would be sold off during the first quarter of 2008 because it was comparatively undervalued, and that the market would then recover so strongly that we would see real estate prices jump upward at a rate of 10.6% during the following 12 months.

No kidding! That's what they predicted.

Let's take a look at what we now know.

Lack of subprime mortgages? We now know that this part of Florida had way more than it's share of subprime mortgages. This has resulted in our being among the nation's leaders in subprime mortgage foreclosure rates, and that those "problem mortgage" properties continue to swell the inventory of properties for sale.

So much for Moody's contention that subprime lending was not a problem here.

Strong economy? The Bureau of Labor Statistics has just released data, published in the St. Petersburg Times on October 19th, that Pinellas County ranks FIFTH in the nation in job loss for the twelve months ended March, 2007. The county lost a total of nearly 5,400 jobs during that 12 month period. Is it any wonder that public school enrollment is down in the county?

So much for Moody's second contention that the local economy is strong.

Strong local economy and low subprime lending. Those were the two points upon which the V-shaped recovery curve was put forward by Moody's and published in Forbes. Kinda makes you wonder if these guys were really doing their homework, doesn't it?

Look, there could still be a V-shaped recovery. I hope there is. It would be to my advantage for goodness sake. The thing is, I don't think we're finished with the sickness yet. Until this disease runs its course, I think it is too early to talk about recovery. I think there is more to come. Some of it will not be nice. Some of it will impact non-real estate related industries. To say things will be better in the first quarter of 2008 is wishful thinking in my humble opinion. There are just too many hurdles that need to be overcome before we can talk about a real estate recovery -- V-shaped or otherwise. And even having big-shots like Moody's and Forbes say otherwise doesn't make it so.

Here's something else to put in the back of your mind -- but not too far back.

The U.S. dollar is trading ever weaker against both the Euro and Canadian dollars. Today, that weak dollar sent oil over the $90 per barrel mark in a price increase that experts say has nothing to do with supply-and-demand. It has to do with a weaker American economy. If you remember the Nixon/Carter years, you've seen this kind of thing before. How do you spell recession? And what would a recession do to the V-shaped curve and the much anticipated real estate recovery? I know, I'm just borrowing trouble. Being negative. It'll never happen. You can't apply things that happend back in the day to what will happen today. That would mean you studied -- what's that course they don't teach much in school anymore -- oh yeah, history.

For more information on real estate in the Tampa Bay area, please visit my blogsite at http://www.thestpeterealestatesite.com/.

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What Are You Paying For In Your Real Estate Commission?

I can't tell you how many times I've heard people say that they won't hire a real estate agent because agents don't do anything for their money. Their belief is that real estate agents earn way too much money for the amount of time they put into selling a property.

What these people need to understand is that agents don't sell their time.

Agents sell RESULTS.

When an agent sells a house, the seller owes a commission. But if an agent fails to sell the house, the agent gets paid nothing. No results, no commission. Very simple. Very fair.

Now, if agents sold time rather than results, there would be a different scenario. Imagine how a seller would feel if at the end of a listing period the house was still unsold, but the agent knocked on the door and presented the seller with a bill for his and his company's time investment and out-of-pocket expenses incurred for unsuccessfully marketing the property. "Not fair!" the seller would lament. "You didn't get my house sold! You didn't get the result I wanted!"

I wonder if the people who won't hire a real estate agent because they think agents earn too much money per hour have the same outlook toward hiring other professionals? Do they ask their physician how much money per hour he earns to do brain surgery? Do they select their attorney based on who has the lowest hourly rates? Do they look for a CPA who advertises that he'll do taxes fast and cheap? Of course not. You hire the professional who will do the best job of saving your life, keeping you out of jail, and helping you pay the lowest amount of taxes --and the fees they charge are the fees they charge, and you pay those professionals on an HOURLY basis.

Realtors are the only professionals I can currently think of that get paid based solely on successful results. If the results are successful, how can the fee be too high? Remember, time spent on a project is not a benchmark of professionalsim. Results are the only benchmark that matters. Think about that the next time you have to pay a real estate commission, especially if you get a fast sale.

For more information on real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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Good Advice For Sellers From Wachovia Bank

The folks at the economic forecast team at Wachovia Bank have some sage advice for people who want to sell their real estate: Cut The Price.

According to Wachovia's "Housing Chartbook", just issued this month, real estate speculators created so much demand for homes in recent years that it created unrealistically high prices. These high prices have left buyers financially unable to purchase.

The Wachovia forecast said that what needs to happen now is for prices of new and existing homes to adjust downward so that families earning the median household income can once again afford to buy a wide assortment of homes, particularly in such states as Florida, Nevada and California.

In Pinellas County, the latest figure I've seen for "median" household income is about $45,000 per year. "Median" means that half the people fall above that level and half below it. The St. Petersburg Times has reported that the "average" household income is $41,000 per year. Those two figures are pretty close.

The questions then becomes one of how much home can the so-called average Pinellas resident afford to buy based on his income? Let's assume that the person uses 40% of his annual income for housing, and that he obtains a fixed rate mortgage of 6.5% for 30 years. For this example, we'll assume the median annual income of $45,000.

Essentially, the buyer can afford to spend $1,500 monthly for housing expenses. Housing expenses include payments for principal, interest, taxes and insurance (PITI). According to my mortgage amortization guidebook, that person could qualify for a house costing in the neighborhood of $230,000 based on the mortgage outlined above. In Pinellas County, the median price for a single family home has been in the $220,000 range for some time now. So, theoretically, the "average" homebuyer can afford an "average" house.

Ah, but not so fast. To be financially responsible, you have to deduct from that $1,500 monthly housing expense the costs associated with taxes and insurance. Those are the expense items that are causing all the debates from Main Street to Tallahassee. When you factor those expenses into the equation, our average wage earner falls short of being able to afford a median priced property.

When this happens, buyers have to look at less expensive homes in less costly neighborhoods that may not be as appealing. That has many buyers shaking their heads in disbelief about how little home their money actually buys in Pinellas County. So, many buyers today are sitting on the sidelines waiting for sellers to voluntarily lower prices. Some sellers are getting that message, many others apparently are not.

Good real estate professionals and other financial advisors are urging sellers to lower their prices. Some sellers are, some are not. If a property is going to be sold in today's oversupplied market, there is a basic rule of economics and marketing that absolutely must be believed as if it were the gospel truth. That is simply this: Whenever there is an oversupply of anything, only those items deemed to be the best value will be purchased.

Understanding this basic rule is the place to start when thinking about reducing the price of a home, as suggested by Wachovia Bank. If you are going to sell a house in today's oversaturated market, sellers must first make their house the best value in the neighborhood. If not, most people won't be able to afford it and the house will sit unsold for months and months and months. Simple as that.

For more information on real estate in Pinellas County, visit my website at http://www.thestpeterealestatesite.com/.

September: I had A Feeling About This

Did you ever get one of those sinking feelings that says things aren't going quite as well as you'd hoped?

I had one for the entire month of September. Turns out I was right!

Let's start by looking at the Absorption Rate (AR) which, as you know, is determined by dividing the number of units sold during the month by the total number of listings in the MLS.

The AR for single family homes during September was 4.8%. That's painfully poor. In August it was 5.9%. That's only slightly less painful.

The AR for condos during September was 3.1% versus August's 3.7%, so condo sales are still sliding downward.

The actual number of single family homes listed in September grew to 9,233 in Pinellas County; in August there were 9,141 single family homes on the market. So, inventory increased somewhat during the month -- but not a whole lot.

Sales for September fell to only 442 homes throughout the county, while in August 540 single family homes were sold. Percentage-wise, that's quite a big drop as you can calculate yourself.

Here's what is really surprising to me ... the median price fell to $199,000 for September. In August it was $219,900. So, there are more single family homes on the market, fewer being sold, and many of those that did sell appear to have been lower priced properties.

The condo report is similar to the single family home data.

In September, some 8,527 condos were on the market versus 8,464 in August. Condo sales in September were only 267 units, while the sales figure for August was 311. The median price for condos went up! From $155,900 in August to $162,600 in September.

So, this means more condos went on the market, fewer of them were sold, but the ones that did sell were probably priced a little higher than they were last month.

What does this all mean? I dunno. Maybe it means we should all work smarter, be more patient, and not get discouraged. Perhaps we should all start to enjoy the lovely fall weather, watch the World Series, cheer our favorite football teams, load up on Holloween candy, and hope that buyers will begin to realize that this is a great time to make offers on real estate. In other words, keep your chin up.

For more information on real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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Sellers' Are Losing Their Negotiating Position

Perhaps without realizing it, sellers in today's market are finding themselves in a weaker and weaker negotiating position against today's more aggressive real estate buyers.

Many sellers, especially those who purchased at the top of the real estate market in 2004-2005, have asking prices which they believe will allow them to part with their property with a small profit or at least break-even. The problem is that today's buyers really don't care if the seller breaks even or not.

Here's an example of what's going on in the marketplace ...

Let's take a property that has been on the market for six months -- not an unheard of time in today's real estate market. Finally, an offer comes along from a bona fide buyer, but it is 20 to 30 percent below the asking price. The seller counters the offer at a price more to his liking. If a property has been on the market for a long period of time, buyers assume that there are no other buyers making offers on the property. With no competition, buyers have no incentive to raise their offer to offset an offer from another buyer. So, buyers often simply reject the counter-offer and demand that the seller accept their original price and terms. If the seller refuses, the buyer often moves along. There is so much property available that buyers simply move to the next property in a long list of possible properties to buy. The seller is left with his house still on the market and the carrying costs of ownership.

Sellers have very little leverage in these negotiations because buyers have so many property-buying choices and such little competition from other buyers. When months pass and there appears to be only one buyer willing to make an offer, only a naive seller would think he has the strength to be an aggressive negotiator and demand his price and terms. If it took six months to generate the first offer, it may be another six months before a second offer comes along. That means six more months of carrying costs on the property!

When there is only one offer instead of multiple offers coming in, sellers have no negotiating strength. They can reject the buyer's offer, but they do so at their peril. It may be a long time before they see another offer in a market like we have today.

Some advice? Sellers should take every offer seriously and treat it like it is the only offer they are likely ever going to get.

For more information on today's real estate market in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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Self-Employed And Need A Mortgage? Could Be Tough Unless ...

Those easy-come-easy-go lenders who specialized in making mortgage loans to the self-employed have pretty much gone.

Today, if you're in business for yourself, you'll find much tougher standards, making it ever-so-much harder to qualify for a mortgage.

Marc Savitt, president of the National Association of Mortgage Brokers, has some tips that might make the loan-qualifying process a little easier.

• Be prepared for more documentation. Savitt suggests that in addition to two years of tax returns, self-employed borrowers might need to provide a profit-and-loss statement, bank statements and proof that they've actually been in business for the last two years. The old standby letter from your CPA just won't cut it anymore.
• Reduce your tax deductions. Savitt recommends you show as much income as possible by reducing the number of tax deductions.
• Get ready for a larger downpayment. Savitt says mortgage lenders today are finding the old-fashioned 20 percent downpayment to be very persuasive.
• Get your credit rating in tip-top shape. A credit score of 720 or more will give the self-employed some mortgage options.
• Be patient. Qualifying for a mortgage used to be a quick, easy deal. Now, it's going to take some effort on your part and more time.

For more informtion about real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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