Monday, August 22, 2016
1. From a seller's perspective is it better to have the buyer's escrow deposit held at the seller's title company?
2. From a buyer's perspective, is it OK for the deposit to be held at the seller's title company?
3. From an agent's perspective, is there a good reason for not holding the escrow deposit in a real estate broker's escrow account?
Answers: All three, a resounding NO
This quiz was prompted by another instance this past weekend of a seller's agent requesting that the buyer's escrow deposit be held at the seller's title company. This has become more frequent over the years as more and more brokers stopped maintaining escrow accounts because of the hassles of reconciliation and Draconian oversight. To understate, they are a big pain in the butt, but worth it for the clients' protection.
Our local Association of Realtors made a mistake last year in a revision of the MLS listing entry form and added a listing field for "Escrow Agent". It has always been customary in Florida for the seller to select the title company as they usually buy the owner's title policy for the buyer. What has not been customary is for the seller to select the holder for the buyer's escrow deposit. As soon as this field appeared, rookie and experienced agents alike began demanding that buyers hold escrow with the title company or attorney named in the "Escrow Agent" field. Some of them did this out of ignorance and lack of experience. Others wrongly assumed that it was required since it was a part of the listing.
Our MLS committee corrected the entry form two weeks ago to "Closing Company" to relieve the confusion but some agents are still dangerously requesting escrow deposits to be held by a title company. Why does it matter?
It only matter if the sale falls apart and there is a dispute over the deposit. Most title companies and attorneys will not disburse escrow deposits unless both parties have signed a release and cancellation. A buyer can cancel in good faith under the terms of the contract and be entitled to return of the deposit but if the seller refuses to sign a release and cancellation, the title company will probably not return the deposit to the buyer. From the Florida Association of Realtors :"Ask an Attorney" forum.
In most cases, a title company will require clear written instructions from both parties before releasing the deposit. If the parties can’t provide matching instructions within a reasonable period, the title company will likely deposit the funds with the local clerk of courts, and either party may then file a court case to argue why they believe they’re entitled to the deposit.
Under the same circumstances, if the money is held in a Florida real estate broker's escrow account, there is a free dispute resolution process. The broker holding escrow may request an Escrow Disbursement Order (EDO) from the Florida Real Estate Commission (FREC). They will review the facts and issue an order for disbursement of the funds based on their findings. No cost to either party. Holding escrow in a broker's escrow account is not a casual recommendation on my part. I have been involved in escrow disputes and, in every case, thankfully, the dispute was resolved for free by FREC. Agents who have not been involved in a dispute are likely to have a more cavalier attitude towards it.
Our takeaway: Barring unusual circumstances, it is always safer for the seller, the buyer and the agents involved for a buyer's escrow deposit to be held in a Florida real estate broker's escrow account. Listing agents reading this, be happy that I am willing to hold the buyer's deposit in our escrow account. You and your client are more protected. Buyers and sellers reading this, if your agent recommends the title company hold escrow deposit ask one question; "Why?"
"I wanted to be a comedian." __Kelly Slater
Saturday, August 13, 2016
The little turtle pictured hatched early in the morning (not a good time) in south Cocoa Beach and was just making his way to the ocean as the sun was rising. There was a flock of crows picking off stragglers but with a little human scarecrow action this one made it safely to the ocean for his first day of life.
We entered August with an inventory of just under 250 total condos and townhomes for sale in Cocoa Beach and Cape Canaveral. That's the number of units that have closed since early April this year. The demand/supply imbalance continues to pressure prices higher. Lacking some unforeseen macro event I see nothing to reverse this trend.
Our depleted inventory is part of the aftermath of the bust in 2006-07. When prices fell off the cliff then we had a tremendous amount of supply force-pushed forward. Many people who may have been planning to sell their properties a few years down the road suddenly found themselves upside down (owing more than the property was worth). The decision became; wait it out and hope the value returns soon, sell for a loss, do a short sale or let the bank take it back. Those that decided to wait it out, in some cases, are still waiting almost a decade later. The majority chose to dispose of their properties before it got any worse. The result for us in 2016 is low inventory because some of what would have been for sale this year was forced onto the market years earlier.
Many of those who decided to wait it out are still waiting. A unit at Magnolia Bay that closed last month for $435,000 was pre-construction priced in 2005 at $589,900. Another unit in the same building that closed in July for $530,000 had a pre-construction price in 2005 of $769,900. The story is the same in the older buildings. A unit in the 43 year old Villa Vista building on Ocean Beach Blvd. sold in 2005 for $367,500 and was then totally remodeled. Even with the remodel it sold last month for $242,000, 2/3 it's price 11 years ago. And, the granddaddy of extremes was a small 1/1 condo a couple of blocks from the beach in Cape Canaveral that sold last month for $55,000 after last selling for $142,000 in 2007.
I give these examples for those who are concerned about prices. Our increase has been healthy and orderly since bottoming out about five or six years ago. Bargains relative to peak prices are still being had as long as buyers can accept that they missed the absolute bottom. I see current prices in our slowly rising market with an abundance of demand as attractive. Long-time readers know I have no reservations calling it the other way if or when I see it.
I heard Bob Iger of Disney say this past week that he is not concerned with any impact from Zika fears to their Florida businesses. Maybe they're immune but I have lost $795 so far from Zika concerns. A pregnant guest cancelled a reservation on advice from her doctor not to travel to "anywhere in Florida". I agree with his "safer than sorry" caution and hope the few number of cases will be confined to the small area in Miami where the only Florida cases have shown up. Luckily we don't see many if any mosquitoes of any kind oceanfront in Cocoa Beach. The sea breeze does more than cool us off on hot days.
Two weeks until snook season opens and, on an unknown date but soon, the mullet run begins. Get the surf fishing gear ready for the best beach fishing of the year.
What's the deal?
Spin the wheel
If the dice are hot...take a shot
Play your cards. Show us what you got
What you're holding
If the cards are cold
Don't go folding
Lady Luck is golden
She favors the bold.
__________________Roll the Bones by Rush
Thursday, July 21, 2016
Sales in Cocoa Beach and Cape Canaveral continue at a brisk pace. The 11 year record breaking number of sales in May and June despite record low inventory is evidence of the extraordinary demand for residential properties that we are enjoying. I see no evidence that this has changed. So far 34 units have closed and another 39 have gone under contract since the month began. There are only 237 condos and townhomes for sale at the moment in our two cities and another 25 in planned buildings. We closed more than a third of that existing unit number last month alone.
Of the condo and townhome sales closed so far in July the average selling price was 95% of the last asking price. That "last asking price"qualifier is important. Of the 35% of sales that were on the market less than a month, none had a price drop before accepting a contract. That means they were priced right when listed. Of those who started high and later reduced their asking price, average time on market was 83 days. Sellers take note.
It seems everyone in town is walking around with bulging grocery bags. In most cases they are filled with mangoes like the one pictured. This is one of those years when every mango tree is loaded down and the harvest is so excessive that those with trees are giving mangoes to everyone they know. The locals are forced to eat excessive amounts of mangoes every day or live with the guilt that they are going to waste. We can only make so much salsa and chutney and freezer space eventually runs out. It's a tough problem but we'll see it through. By the way, that mango pictured is as tasty as it is pretty. Juicy, not stringy and as sweet as ice cream.
“If it could only be like this always – always summer, always alone, the fruit always ripe and Aloysius in a good temper…” __Evelyn Waugh, Brideshead Revisited
Wednesday, July 06, 2016
The first half of 2016 ended on a strong note with a record month of property sales in Cocoa Beach and Cape Canaveral. June 2016 was the second busiest month for closed condo and townhouse units since the peak of the boom in 2005 with 77 units recorded as closed so far in the Cocoa Beach MLS. As always, that number could increase as tardy listing agents get around to closing out their sold listings. For perspective, that is 29% of the entire inventory sold in one month. In addition, during the month there were 14 closed single family homes and a single half duplex. A third of the homes sold for more than a half million dollars with two river houses closing above the million dollar mark.
Condo sales were concentrated in the lower price ranges with two thirds of the 77 sales under $250,000. Only three units sold for a half million or more, the highest, one of the three big 4/4 Magnolia Bay units that closed for $565,000. Mortgage use for condo purchases continues to increase with just under half of the condo buyers in June using a mortgage for the purchase.
There were 81 closed single family homes and half duplexes from January 1 through the end of June. There are 55 currently for sale. Buyers who want a single family home on the water in Cocoa Beach have 31 to consider at prices from $2.95 MM for a brand new direct ocean 2 story with 4667 square feet to a nicely remodeled 55 year old 3/2 canal home with 1520 square feet asking $399,500. Almost two thirds of them have been for sale for more than 100 days so we can assume some resistance to the asking prices considering the number of buyers actively looking to purchase. Likewise over half of the condo listings have been on the market over 100 days. Same assumption about pricing can be made for most of these.
About "days on the market": This number can be manipulated by an ambitious listing agent so it can't always be trusted. Your buyer's agent can peek behind the curtain for the true listing history. A listing can be withdrawn and relisted to reset the days on market clock. Same thing can happen with an expiration and relisting. While we're on the subject of accuracy, I get lots of calls and emails from out-of-town buyers who have spotted a waterfront condo unit at a very attractive price on the MLS or one of the other big real estate websites. Those too-good-to-be-true prices are almost always misrepresented properties. While Villages of Seaport is technically an oceanfront community and a listing agent can code a listing there as "oceanfront" they never mention that the cute $115,000 two bedroom townhouse listed as "oceanfront" is actually a half mile from the beach. Likewise a smoking deal on an "oceanfront" Conquistador usually turns out to actually be in the non-waterfront Conquistador building on the west side of Ocean Beach Blvd.
Turtle nesting activity in south Cocoa Beach has been strong with a short walk on the beach most any morning revealing several new nests.
“Arguing with anonymous strangers on the Internet is a sucker's game because they almost always turn out to be—or to be indistinguishable from—self-righteous sixteen-year-olds possessing infinite amounts of free time.” __Neal Stephenson
Monday, June 27, 2016
Despite these tight inventory levels, we are continuing to see strong numbers of sales. Since the first of the year 340 condo and townhouse units and 77 single family homes and half duplexes have closed in the two cities. In the month of June we've already closed 57 condo units with a median price of $211,000. Closed direct oceanfront units above the ground floor this month have sold for between $231and $304 per square foot. Nice direct river units have been closing in a range between $155 and $200 a foot. Thirteen of the 53 new condo listings this month are already under contract.
Since June 1, eleven single family homes have closed at prices between $255,000 for a cute little 1042 square foot home one block from the ocean south of downtown Cocoa Beach to $1.1 MM for a gorgeous 14 year old Key West style open river home with 3985 square feet north of 520.
"I got my own way of talking, but everything gets done
With a southern accent, where I come from." __Tom Petty
Saturday, June 11, 2016
There are Cocoa Beach condo listings on Zillow right now with inflated sizes that I suspect are outright attempts at deception by the owners. I would advise all buyers and agents to begin checking the advertised size against the tax records. A 159 square foot error doesn't sound like much but at $318 per square foot we're talking over $50,000.
Another relatively common error on the MLS is condo fees. Often an agent or her assistant entering a new listing will look at previous listings for the monthly condo fee amount if they don't already know it. If wrong, the error may go unnoticed. Same thing happens with long-listed units. The monthly fees may have changed since the original listing without getting updated. As always, it is up to a buyer and her agent to verify the data being presented to them. The MLS is only as good as the data being input. How about a FSBO? Same deal except probably even more important to question everything. Ultimately, it's a buyer's responsibility to verify everything.
There were 72 condo units closed in the month of May in Cocoa Beach and Cape Canaveral. A third of those sold in two weeks or less. Slightly more than half sold for cash. Inventory this morning is at 277 units with 25 of those in buildings yet to break ground. Those looking for a good, fairly-priced property don't have a lot to choose from. We are not seeing the same flow of new listings coming on the market that we were seeing earlier this year which is typical. For those hoping to purchase, this means, as always, know what you're looking for, know what a fair price range is and be prepared to offer quickly when you find it.
I witnessed another crazy closing yesterday. The buyer's lender botched the closing disclosure multiple times with inaccurate numbers and finally got it right just as everyone involved was ready to walk away from the deal. Buyers choose your lender carefully. Experience with the local market and property type is worth far more than the lowest promised rate. The guy in the call center in Texas who promises you a rate three basis points less than the local guy may have no idea what his underwriter is going to require for a Florida condo loan and may find out too late to close on time or at all. Rate means nothing if he can't close the deal.
After a week of daily rain, you can almost watch the grass and plants growing. The annoying sound of Florida's favorite tools, the leaf blower and weed eater, are rarely absent during daylight hours this time of year.
"To be one, to be united is a great thing. But to respect the right to be different is maybe even greater." ___Bono
Tuesday, May 24, 2016
At the other end of the spectrum, one of the condo units received an accepted contract after being on the market for eight years with eleven price changes. The asking price when contract was accepted was $165,900. At one time during the eight years they were asking $290,000. This is a classic example of denial being dragged kicking and screaming into acceptance of reality. Price it right and it will sell. Some sellers take longer than others to accept that.
During the same seven days, twenty properties closed, nine of those for cash. Prices of the closed properties ranged from $69,000 for a one bedroom Marlin Apartments unit to $785,000 for a beautiful open water single family home in Cocoa Beach. One of the closed condos was another long-listed unit that has been on and off the market since 2008. It was listed for $1,195,000 in 2008 with gradually reducing prices until it closed fully furnished for $690,000 last week. At $318 per square foot, that should be a reality check for the other units in that building asking far above that number but I'm guessing it won't.
I attended one of the more memorable and lengthy closings of my career last week. The closing agent was slower than most and took about twenty to thirty minutes to read through the settlement statement and loan documents while the buyers signed. Sellers had signed earlier and weren't present. When she finally finished I questioned whether the May condo fee had been paid by the sellers since there wasn't a credit on the settlement statement. She responded that she didn't know and would have to find out. First time for everything but shocking nonetheless especially considering that a condo's management must complete an estoppel for every sale showing what a unit owes the association if anything on day of closing.
She left the room closing the door and we discussed what the difference would be. If sellers had not paid May's fee they would owe the buyers $288. If the sellers had paid May's fee, the buyers would owe them a refund of $182 for the remaining twelve days of May. Twenty minutes later the closing agent returned and said that she had forgotten to add the condo fee to the statement and that the buyers owed $16 to the sellers. Huh? The buyers gave her a $20 bill and she disappeared again to get change. Another twenty minutes passed without a peep so I went roaming the halls of the attorney's office and found her in a back room. She said that the lender was preparing a new disclosure reflecting the changed amount. I returned to the closing room and when she came in a little later with the new disclosure and the $4 change I asked how she came up with $16 for 12 days of a $470 fee. She responded with "Can we just let it go and sign this as it is?" She admitted that she had made a $1500 error on an earlier closing that day. We exited the office two hours and ten minutes later for a closing that should have taken less than thirty minutes and that was completed with an acknowledged error on the statement.
Our takeaway: Buyers, sellers and agents (when you are allowed a copy) please read the settlement statement carefully. Mistakes happen. Sellers agents I would ask that you choose the title company/closing agent carefully. Most are professional and pleasant but there are a few out there that are difficult and can make closings feel like torture. Another story next post involving two title companies (one good, one bad) and another difficult closing.
“Never interrupt your enemy when he is making a mistake.” __Napoléon Bonaparte
Saturday, May 14, 2016
Property sales in April in Cocoa Beach and Cape Canaveral, while brisk, declined year over year for the fifth consecutive month. The record low inventory levels we hit last summer were impacting closed sales numbers by year's end. We have since recovered somewhat in number of properties for sale but still remain well below historic levels. There are 296 condos and townhomes and 71 single family homes for sale this morning in both cities. As I've mentioned before, many of those properties are so overpriced as to be "not really for sale".
Unless we have a strong second half of the month, May sales look to fall well below last year's 71 units. Prices, however, continue their slow upward trajectory in spite of the slowing number of sales. Those looking to buy, as always, need to be able to distinguish those properties that are priced within striking distance of fair value. It is possible to waste a lot of time and energy looking at nice but overpriced property.
The weather in Cocoa Beach the last few weeks has been about as good as it gets. Light winds, moderate temperatures, warm ocean water and a lingering small longboard swell. Add the absence of crowds and it is everything one expects in a small Florida beach town. Today's forecast; sunny with a high of 80 and light variable winds. Superboat races tomorrow offshore Cocoa Beach between the Pier and Lorrie Wilson Park.
"You know what the secret to weight loss is? Don't eat much." ___Simon Cowell