Agent bonus - Conflict of interest?

I've been thinking about agent bonuses and commissions for quite a while. As our market has slowed, we are seeing sellers offering higher commissions and bonuses, supposedly to get agents to push their properties. I received a postcard this week from a developer offering not only 3% commission but also a $1000 bonus to any agent bringing a performing buyer. This is troubling to me. It suggests to me that the seller offering the bonus thinks that I would steer my buyer to their property because I would make more money. Folks, if your agents are selecting properties to show you based on the amount of money that they will make, they need their butts kicked. This whole idea of paying a bonus to the selling agent seems to me to be a serious conflict of interest and an incentive to engage in unethical behavior. Without asking, a buyer may never know which properties are more lucrative for their agent, or, if they are even being shown all properties. As it stands, bonuses are legal and commonly offered. I'll go on record as saying the practice has a foul odor to me.

Activity has picked up somewhat with 28 total closed sales of MLS listings in Cocoa Beach and Cape Canaveral from Feb. 1 through Feb. 26. At that rate it's going to take quite a while to burn through the 1096 total listings showing on the MLS. Actual total is probably under 1000 because of dupes but in round numbers we are looking at a 3 year supply.

Portside Villas has begun closing the 3rd and 4th buildings and sellers are getting serious with prices hoping to finally cash in on the deposits they put down two years ago. Expect some great deals to be had in the next few months there. Call me at 321.917.5786 or email if you'd like to take a stab at a brand new condo, walking distance to the beach and Port for under $200,000.

Zillow, more or less

The buzz surrounding the launch last week of Zillow.com was thick. This handy online tool aspires to be a user-friendly, automated property valuation machine but falls short, at least in my opinion. At this point Zillow is best approached as entertainment, but it is likely to be embraced by those whose unrealistic price expectations are confirmed by Zillow's faulty estimates. In my experiments with Zillow, I found quite a few errors and some valuations were off by hundreds of thousands of dollars. I suspect that both sellers and buyers with unrealistic expectations of property value who get a confirmation from Zillow may be even less flexible when faced with market realities.

Imagine that your real estate agent suggests a selling price of $500,000 for your condo based on research and adjusted comps. Being an astute, computer-savvy person, and having heard of Zillow, you run an estimate and Zillow returns a market value of $650,000 for your condo. Do you suspect that the agent is trying to get you to under price your property so she can make a quick easy commission? Sure you do. You immediately find another agent who will list your condo for the Zillow estimate of $650,000 and congratulate yourself on your wisdom, at least for the first few months.

Now imagine in another scenario that Zillow returned an estimate of $420,000 for that same property but you trusted your agent's suggested price and listed for $500,000. You can expect that any buyer who runs an estimate on Zillow will be very reluctant to offer close to your asking price even though it is backed up by adjusted comps.

Go to Zillow.com and do your own research, but, if you're buying or selling, don't trust these valuations to be anything other than broad estimates.

No snow in Florida

It's been a busy beginning to the year for me, but, my activity is not representative of our market as a whole. Our MLS backs this up, with closed sales continuing to slow even from the tepid pace in January. As I've been saying, our new MLS is still unreliable for statistics other than actual closed listings, so, I will continue to limit my stats to that number. For the first 14 days of February, 2006 we have had the following closed sales of MLS-listed properties in Cocoa Beach and Cape Canaveral.

Single-family___4
Condominiums__3

The MLS shows 1079 active residential and condo listings but the actual number is probably 20% less than that due to duplicates and incorrect-status listings. Even with extremely slow real estate sales, Cocoa Beach is experiencing a busy snowbird season. Today is Tuesday and, according to the starter at the Cocoa Beach Country Club this morning, the first available tee time is next Monday. Go figure. With a forecast of mid-70s for tomorrow, I'll settle for a round on the mainland at the beautiful Viera East course.

Half full / half empty

Before I begin with this update, I'd like to share a photo I took at the Cocoa Beach golf course yesterday. Notice the ball under the back leg. Makes for an interesting golf shot. Now back to your regularly scheduled program.
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The housing market has become as discussed as America's foreign policy and, like that touchy subject, is home for many differing opinions. The following are news stories from the last week about Florida's housing market. Even though some writers are bold enough to express reservations about the continued upward trend, the tone of most Florida newspapers is still optimistic. That is understandable considering the amount of advertising revenue that the real estate industry generates for them. Of importance when reading these stories is the fact that the new condo markets and the single-family home markets are distinctly different. The level of investor involvement in the condo market has contributed to a disconnect from fundamentals. Personally, since the first of the year, I have seen greatly reduced investor interest but strong end-user buying activity. Investors may stop speculating, but those who want a place in Cocoa Beach for the weather, the ocean and river and the un-hurried lifestyle continue to buy.


from the Palm Beach Post "Some froth, no bubble"
Sarasota's Herald Tribune, "Real estate market is steady"
South Florida Business Journal, "Broward home prices continue rise"
Miami Herald "High home prices settle down"
Reuters "Florida median home prices dipped in December"
Commercial Property News "'Soft Landing' for Condo Investments"
Tampa Tribune "Anybody Home?"
Tallahassee Democrat "The forecast: sunny and stable"
WESH2 News "Florida's Real Estate Market Gets Cooler"

Our new MLS is still unreliable for statistics other than actual closed listings, so, I will limit my stats to that number. For the month of January 2006 we had the following closed sales of MLS-listed properties in Cocoa Beach and Cape Canaveral.

Single-family____4
Condominiums__29

If you want a place on the beach or near it, there have been some excellent buys recently. How about this one, a 3 bedroom, 2 bath direct ocean unit at Royale Towers that sold Jan. 10 for an incredible $325,000, or $225 per sq.ft. Still active is a 3 bedroom, 3 bath direct river unit at River Lakes, 2 blocks from the beach with a boat slip available for $299,000. No matter what happens to the investor-dominated new high-end condo market, properties like these represent great value and an opportunity to own in desirable locations in our great little beach town. Email me if you'd like a list of my favorite current listings.