Friday, May 25, 2012

Ding dong

Sweet Cushman scooter in front of The Surfinista
I know I've said before that no one would be ringing a bell at the bottom of the price decline but I changed my mind and just rang it. Readers know that I often mention that there is no "market" that one buys, only properties. The "market" bottom will not coincide in most cases with the bottom in specific property types, neighborhoods or condo complexes.  There are different dynamics at play in each category. This bottoming began over a year ago in troubled complexes like Mystic Vistas which was ahead of the curve because of the high number of developer foreclosures. We have already seen enough closed sales there at prices 20% to 25% above the lowest prices to safely say that it's unlikely we'll see any reason for prices to drift back to that range from two years ago when units sold for $150,000. The last of the developer foreclosures have closed.

The bell will be ringing later for a few other complexes like The Pier Resort which still has eleven active foreclosure listings, half of all foreclosures currently for sale in Cocoa Beach and Cape Canaveral. We could very well see prices drift lower there before the remaining units are sold. In general, the mountain of short sales and foreclosures have been absorbed. Those sellers who hung on through the downturn now have some negotiation strength selling into a skinny inventory without competition from loads of distressed properties.

Out of 362 total residential properties for sale in the two cities, 12% are either short sales or foreclosures, 3% of the total at the Pier Resort. Four new short sales units that hit this week in south Cocoa Beach have multiple bids and will be under contract shortly. Absent those and the Pier Resort units we are at 8% distressed. Compare that to 56% of condo sales distressed in 2010.

In 2010 the tide of distressed deals peaked. As of  May 2012 that spring tide of supply has receded. This morning we have less total condos for sale than we had distressed listings two years ago. Instead of a choice of 300 plus short sales and foreclosures in spring 2010, this morning buyers have 44 distressed sales from which to choose with eleven of those in one complex. For a buyer serious about getting a property here at a significant discount to recent prices, the quest to get the lowest price in the complex will more often than not be unfulfilled. Those waiting for another $150,000 Mystic Vistas since 2010 are still waiting and watching prices notch steadily higher.

Draw your own conclusions. If I were personally looking to purchase a residential property in Cocoa Beach or Cape Canaveral, at this point I'd be less concerned with getting the lowest price in the neighborhood than in getting exactly the best-suited property for me. Prices are still very discounted (in most cases) from the peak six years ago and the inventory continues to shrink. I'd love to have been the guy who bought a Mystic unit for $150,000, but, in the grand scheme of things, $200,000 ain't such a stinking deal, ego aside.

Enjoy your Memorial Day weekend. As I type this, the Dragon spacecraft is docking with the International Space Station. Right on, private industry.

"As Coroner I must aver, I thoroughly examined her.
And she's not only merely dead,
she's really most sincerely dead.
Ding dong, the witch is dead."
_____from the Wizard of Oz

Friday, May 18, 2012

May - so far

This needs to be repeated: All the research in the world and the most persuasive argument for a well-substantiated price is meaningless to a buyer or seller who refuses to accept it.

I can show a seller of real estate that the market price for her property is between X and Y dollars based on recent sales of similar properties. If she thinks prices are headed up and is unwilling to accept an offer between $X and $Y a sale isn't going to happen unless a buyer wants the property enough to pay more. Conversely, a buyer who believes prices are going lower and will only pay less than fair market value, may not find a seller willing to play. Despite the high incidence of unrealistic participants in our market we continue to see about ten pairs of buyers and sellers of residential properties finding the middle ground and closing every week in Cocoa Beach and Cape Canaveral.

As of this morning, May 18, 2012, there have been six closed sales of MLS-listed single family homes in the two cities. None were short sales or foreclosures. Of the 58 homes currently for sale there is but one short sale and no foreclosures. Of the six sales so far this month the highest price paid was $575,000 for a 5 year old, 4454 square foot, non-waterfront townhome in south Cocoa Beach. This half duplex has never been lived in and has been on the market since May of 2008 when it was offered for $1,395,000.

A waterfront Snug Harbor 4 BR, 2.5 BA on the secret pond on West Bay closed for $260,000. It had 2294 square feet and was on a big .48 acre lot.

A non-waterfront 4/3 with 2441 square feet on Greenwood in Cocoa Beach sold for $301,000.

A nicely remodeled 3/2 with 1329 square feet two blocks from the beach in Cape Canaveral sold for $172,000.

Condo sales are chugging along with 25 units closed so far. Two were short sales and two were foreclosures. Highest sale so far was $675,000 for the entire 4th floor at Riomar. A total of 3008 square feet with 4 bedrooms and 3.5 baths. Super luxuriously remodeled. There were some off-the-record concessions which made the actual price paid over $700,000.

A top floor SW corner with side ocean views at Majestic Seas sold for $360,000. It had 3 bedrooms, 2.5 baths, 2100 square feet and a two car garage. It was first listed less than a year ago for $669,900. That's a remarkably fast turnaround for an unrealistic seller.

Two more Magnolia Bay units have closed, both second floor. One with 2455 square feet sold for $340,000 and one with 2183 square feet sold for $300,000. The pre-construction asking price for the 2183 square foot units in 2006 was $549,900. Now that the complex has stabilized and is around three quarters sold, I think these units are excellent value at these prices. All have 10' ceilings and two car garages and the quality of construction is tops.

A 2nd floor, 3/2 direct ocean SE corner with 1625 square feet at Las Palmas on the ocean in north Cocoa Beach closed for $285,000. It was partially remodeled, fully furnished and had a one car garage.

A top floor corner Solana Lake 3/2 with 1956 square feet closed as a short sale for $230,000. It sold five years ago for $400,000.

One of the bank-owned Pier Resort units with 3 bedrooms, 3 baths and 3400 square feet sold for $265,000. A slight peek of the ocean across the Pier parking lot. They were asking $450,000 for these in 2006.

One of the big rambling corner 3/2 units at Shorewood sold for $210,000. It had 2104 square feet, a one car garage and the tiniest peek of the ocean if you squinted your eyes or used a Realtor mirror.

A south facing Royale Towers C building 7th floor 2/2 sold for $190,000. Had a one car and 1256 square feet.

A north facing Windrush 2/2 on the 5th floor with 1271 square feet closed for $199,500.

A top floor (7th) direct ocean Windward East 1/1 with garage sold for $175,000. 902 square feet.

A Stonewood D building ground floor remodeled 2/2 sold for a shocking $140,000 with the owner holding a mortgage.

Profitable flip: A nicely remodeled, second floor Royale Mansion 1/1 with a peek of the ocean closed for $130,000. We've seen prices for these units move up considerably from last year's sub-$100K closing prices. This particular unit was one of those, selling last August as a foreclosure for $90,500.

A very nice Captain's Cove canal-front 3/2 in Cocoa Beach sold for $129,900. This is smoking deal territory with 1841 square feet, garage AND a boat slip.

We set another MLS record this week with total condos and townhomes for sale in Cocoa Beach and Cape Canaveral dipping below 300 units for the first time. We stand at 294 total units this morning. Of those, 14 are short sales and 20 are foreclosures or 12% total distressed, also a record, the lowest level since 2007 when there were no distressed sales.

I had another crazy Realtor encounter this week, this one with a 20 plus year veteran who apparently is just learning about short sales. I'll spare you the details but trust me when I say that you can't depend on someone's years in the business to be an indicator of their competence. Choose your agent carefully and please ask a few questions of them to determine if there is any gray matter lurking behind the over-sized sunglasses. Sellers would be well-advised to check the MLS listing of their property. I'm sure many would be shocked at the photos or lack thereof and the chimpanzee narratives.

The lingering small swell is still here with favorable light winds most days and the recent rains have turned plant growth on high. Sea turtle nesting activity is strong with several new nests every night on the beach down my way. It's another beautiful spring in Cocoa Beach.

"I'm surrounded by water and I'm not going back again." __Zac Brown

Monday, May 14, 2012

Wearing the greed blazer

Calm day fishing offshore Cocoa Beach.
Had an interesting couple of conversations last week. It began with an email two weeks ago from a real estate company in New York telling me that if I would sign the attached form agreeing to pay them a 25% referral, they would hook me up with one of their clients that was interested in purchasing property in our area. This was my first contact with this company.

It's not uncommon for agents to receive referral solicitations via email although, in my experience, the legitimate ones are typically preceded by a phone call or email from the referring agent with details about the client, specifics of the referral, type of desired property, etc. If I was hungry at the time and wouldn't get the buyer otherwise, I might consider the referral arrangement. I responded with the following; "Are you willing to modify the agreement to reduce the referral percentage if the buyer's broker commission offered is less than 3%? If I wind up selling your client something under $150K that only pays me 2.5 or, Heaven forbid, 2% or less, then giving you 25% of that small amount leaves very little left for me. I'm fair if you are." No response and I forgot about it.

Late last week I received a call from the brother of a client who purchased a condo recently. He said that he would like to work with me as his sister had highly recommended me. We discussed what he was looking for and we talked at length about recent sales, inventory and likely targets for him. After discussing the market and property specifics, he nervously mentioned that he had a "situation". The "situation" turned out to be that he needed to work something out to get his Realtor girlfriend paid a referral. Translation: He needed me to pay her a chunk of my paycheck for doing nothing other than inserting herself between him and the agent he already wanted to work with, me. His understanding was that it would be less than 10% of my pay. I told him that I'd be fair and hoped we could work something out.

Upon further discussion it turns out that she was the source of the email from two weeks earlier who never responded to my questions. About an hour after my conversation with him my phone rings and, Voila, it's the girlfriend who couldn't be troubled to call me the first time to introduce herself. She told me if I wanted to work with him that I was going to have to give her 25% of my commission. A demand like this would normally end the conversation for me but in the interest of helping my client's brother I was willing to pay the extortion if she would be somewhat reasonable. I asked if she was willing to be flexible with the amount of the referral depending on the situation we ultimately found ourselves in, a possible low commission deal or a situation where I might need to concede some of my pay to get the deal done, etc. Her response, "No compromise. If you won't agree to 25% regardless of circumstances I have another agent standing by willing to play by my rules." I told her that, unfortunately, her boyfriend would have to work with the other agent, not the one his sister recommended and with whom he wanted to work.  [A little background: Not all listings pay the same rate of commission. I have been paid as little as zero and as much  as 4%. In the case of a zero commission deal, 25% isn't going to matter but if a listing only pays 2% or less, her demand for 25% will likely whittle my pay into the not-worth-the-trouble range, hence my question about her flexibility depending on circumstances.]

After we hung up I imagine she got busy selling her boyfriend on what a jerk I was and that she's found another wonderful agent to help him. I wish him the best in his search and hope she got lucky and found a decent agent to help him but the chances are that an agent hungry enough to go along with her uncompromising demands is not one of the better choices for him. Think his new agent will be showing him low commission listings or be willing to concede any commission to get a tight deal done knowing that the remainder will be taxed at an onerous 25% before their broker takes his split? Not. To be fair to the pushy girlfriend, many brokers especially those affiliated with national franchises play the heavy hand to get their agents to aggressively pursue referrals. I've worked for a broker like that but never played along because the whole practice of referrals always smelled wrong. It's one of the many reasons why I work from my own brokerage now.

I hired an agent to sell my mother's house in another state last month. I can't imagine any scenario where it would have been fair to expect this hard-working agent to give me part of his check just because I have a license in Florida. His job was no easier because I'm licensed. It's like my niece expecting the The Fat Snook to give her a cut of my tab because she works at a restaurant in Clearwater. Agents out there, listen up. Stop being greedy and potentially damaging your clients by demanding part of some hard-working agent's pay. Just because this stinking practice has been tolerated for years doesn't mean it's right.

I'm left with a bitter taste in  my mouth about my chosen profession and reminded how much greed drives many of those who wear the blazer. It just makes me more determined to be as different from them as I can possibly be. I have never and will never request a referral from another agent because, no matter the situation, it just might, as in this case, negatively impact the client.

Yours truly, The Anti-Realtor

“The first time someone shows you who they are, believe them.” __Maya Angelou

Wednesday, May 02, 2012

April activity in Cocoa Beach

Sales in the month of April continued at the brisk pace of recent months with 51 condo sales in Cocoa Beach and Cape Canaveral as reported by the MLS. The number will creep upward as slacker listing agents update their sold listings.

There were 12 single family homes closed in the month with all but one in Cocoa Beach. Only one of the twelve was distressed, a foreclosed nine-year old, 4 bedroom, 3 bath with 1900 square feet and a 2 car garage 2 blocks from the beach close to downtown Cocoa Beach. It sold for $240,000.

The highest priced home sale was a Cocoa Beach beauty on .83 acres of direct ocean with 5518 square feet, 6 bedrooms, 5 baths and 2 half-baths thrown in for good measure. Closed for $1,095,000 cash.

Other waterfront homes ranged from a well-cared-for, small canal-front 3/2 on DeLeon that sold for $230,000 to a 3926 square foot 3/3/2 on Danube with pool and 150 feet of open waterfront that sold for $500,000. A small older 3/2 on the open river in south Cocoa Beach closed for $333,000.

Of the 51 sold condos, thirteen sold for less than $100,000. Lowest price was a 513 square foot Essex House in Cocoa Beach that sold for $35,000. The other sub-$100K sales were in Morgan Manor, Canaveral Breakers, Atlantic Gardens, Highland House, The Oaks, Twin Towers, Villages of Seaport and the Saturn.

There were nine direct river units closed in the month, all but one in Cocoa Beach. Lowest price paid was $117,500 for a nicely remodeled, fully furnished, third floor 2/2 with 1200 square feet at Treasure Island Club in Cape Canaveral.

Others included; a ground floor 2/2 Sunset Harbor with 1323 square feet and garage that sold for $141,000.

A top (5th) floor Seminole Landings 2/2 with 1080 square feet and garage for $145,000.

A 1st floor Banana Bay 2/2 with 1344 square feet and garage for $158,000.

A foreclosed 8 year old, 2nd floor Solana on the River 2/2 with 2055 square feet and garage for $169,900.

A new 3/3 West End unit (behind Sunset Cafe) with 2084 square feet and garage for $285,000.

A 2nd floor Magnolia Bay 3/3 with 2108 square feet and a 2-car for $320,000.

AND...two more Villa Verde super luxury 3/3.5 square foot corner units closed for $345,000 and $399,000. Note that there may have been buyer rebates. That makes seven of the eight available units closed. One left unless the top floor comes available.

Sales of note in oceanfront buildings included; a 5th floor side view 2/2 Driftwood Villas on Ocean Beach Blvd. with 1101 square feet and open parking that sold for  $165,000.

A partially remodeled ground floor 3/2 La Mer corner that sold for $175,000. Had 1616 square feet and garage. The identical floor plan on the 3rd floor also closed for $226,500.

A 3rd floor north view Windrush 2/2 with garage and 1256 square feet closed for $190,000.

A sparsely furnished and partially remodeled  2nd floor south view Canaveral Towers 2/2 with carport sold for $205,000. Weekly rentals allowed.

A 3rd floor south view Cape Winds 2/2 with the wide balcony and open parking sold for a surprising $225,000. That pushes the comps at Cape Winds back up. Weekly rentals allowed.

A 10th floor Stonewood 2/2 with 1317 square feet and garage closed for $225,000.

A nice north side 2nd floor Sandcastles 2/2 with 1286 square feet and garage closed for $235,000. That has to make the last two purchasers of other same floor plan units there very happy. I represented both. One was a ground floor that sold in March for $140,000 and the other was right next door to the recent sale except that it closed for $70,000 less just a few months ago. The comps are bumped considerably upward at Sandcastles with this closing. Weekly rentals allowed.

A direct ocean 2nd floor Shorewood 2/2 with 1663 square feet and garage closed for $285,000.

An 8th floor Constellation in south Cocoa Beach with 2126 square feet and garage closed for $350,000. Was in mostly original condition. A 5th floor same size foreclosed unit closed for $315,000.

AND...the high ocean condo sale of the month was a 2nd floor Meridian 3/2 with 2072 square feet and garage that closed for $539,000 cash after just seven days on the market.

As of this morning there are 308 total condo and townhome listings in Cocoa Beach and Cape Canaveral. Of those, 21 are short sales and 23 are foreclosures (11 in the Pier Resort alone). Distressed sales now make up just 14% of the condo market. There are 61 MLS-listed single family homes for sale this morning. Five are short sales and there are no foreclosures. That's 8% of the single family home market distressed.

If you're looking to buy, the current trend is obvious. Could that change? Absolutely. Can anyone accurately predict where prices are headed? Yes, but only in the absence of a black swan event. With no tidal wave of foreclosures or other economic Armageddon our prices should continue to stabilize. They have already begun to turn upwards in some complexes. Don't forget that all complexes are not in the same health as evidenced by the foreclosure listings. The Pier Resort is still under the weather while other condos like Mystic and Magnolia Bay have recovered from their flu and are breathing easier. Do your homework and beware your own confirmation bias. If you're expecting the world to end, you tend to look for evidence to support that.

Teach the children quietly for some day sons and daughters.
Will rise up and fight where we stood still.