Thursday, December 25, 2014

That's a Wrap, Cocoa Beach

2014 was an eventful year in Cocoa Beach. I had forgotten how much had happened until I began listing the significant events of the year. I know I may have missed some but these are the ones I can remember that felt worth mentioning.

The picture at the left was taken from the golf course at the Cocoa Beach Country Club on December 20. Temp was in the high 70s at the time. It was a carbon copy of every day of the entire preceding week. By the way, how about those new greens? It's been a couple of years since they tore out the old ones and replaced them with new, salt-tolerant Paspalum grass. They were better than the old very quickly but now that they have completely filled in, they are excellent and, according to one old-timer who plays all over Brevard, might be the best in the county. Kudos to the people who made the decision to undertake this disruptive project and who chose the type of grass to use. It has paid off wonderfully.

Some of the Highlights of 2014

Our new fire station complete with chopper pad on the roof is almost finished directly across the street from the old station which is slated for tear-down. Imagine the Chili Cook-off next year.

The Cocoa Beach Pier was sold to Westgate Resorts of Orlando who have begun total renovation of the 52 year old landmark. I expect big things and probably a challenge of the height and density limits for a new structure on the parking lot. That will be highly contentious if it happens.

The Pelican Landings Resort in south Cocoa Beach was sold and torn down to make room for a magnificent new oceanfront home, a rare case of natural density reduction. It was completed late in the year.

We saw the highest price ever paid for a single family home in Cocoa Beach this year. It was for a 13 year old luxurious, three level direct ocean beauty for just shy of $2 million. That record is soon to be more than doubled when the pending Pumpkin Center oceanfront block closes.

And once again, as we've done for the last six years running, the number of closed residential sales exceeded the preceding year. The over 670 condo units closed in Cocoa Beach and Cape Canaveral (as of Christmas) exceeded the total for every year since 2005.

The final chapter of the Glass Bank saga was begun late in the year as preps for demo began.

The new oceanfront condos on the site of Crawford's Cocoa Cabanas in south Cocoa Beach finally broke ground after first being announced back in 2006 just as the housing crash began. I've been hearing ever since then that construction was about to begin. They are being offered with "boat slips". Caveat emptor.

After voters overwhelmingly supported mixed-use zoning in a small area of downtown Cocoa Beach in 2011, we saw our first two new mixed-use buildings completed, residential upstairs over commercial downstairs. I think we can expect many more of these types of buildings downtown. Also downtown, we saw several other commercial buildings remodeled and re-purposed and several new restaurants, offices and watering holes opened. The old Post Office was sold and remodeled and has reopened as retail and offices.

The Port continued it's blazing pace of growth. The old boat ramps next to Grills were closed to make room for the new Cruise Terminal One which is almost complete. We recreational fishermen scored on this one as we got brand new ramps much closer to the Port entrance adjacent to Jetty Park. The container port appears to be either complete or close to it. The main channel of the Port near the entrance has been widened to allow two cruise ships to pass one another. Next on the agenda there is to turn the area around the Exploration Tower into something like downtown Disney. The conceptual renderings are breath-taking. We've come a long way since Captain Ed's and the scallop plant.

SpaceX completed several successful missions from the Space Center as did the other usual players. The big launch of the year was a massive Delta 4 Heavy in December carrying the Orion space craft. There are a dozen launches scheduled right now for the next eight months from the Cape, seven by SpaceX and five by the United Launch Alliance. The space flight business is firing on all cylinders (nozzles?).

And, while not Cocoa Beach news, the online real estate world experienced a couple of major moves with Zillow buying Trulia and News Corp. buying Point2 and Move, Inc. so that they now own, in addition to Realtor.com, the pipeline for the vast majority of Zillow and Trulia's listings. This one ain't over by a long shot. I can't wait.

We are entering 2015 with an inventory of 257 condo and townhouse units for sale and 60 single family homes.That's about a 4.5 month supply at 2014's rate of sales. Considering this, I think it's reasonable to expect the number of sales to decrease in 2015. There are a total of five short sales and 24 bank-owned properties for sale in Cocoa Beach and Cape Canaveral. That scarcity of distressed sales combined with the low inventory should be a tailwind for continued rising prices. As always, buyers should be aware of market conditions and recent selling prices and be realistic if they hope to purchase. Prices have risen but are still less than the cost to build in many cases. There are gems to be had. Good hunting.

Happy safe holidays to all and a positive and gratifying New Year.


"Your purchase choices are probably fueling slavery. But convenience often trumps ideology, so...whatever." ___ M.Lapa

Friday, December 19, 2014

Robberies Update

Thanks for the feedback from those of you with knowledge of this ripoff. It didn't take me long to find several more examples of the same local brokerage charging their clients the junk fee. The "Broker Only Commission" is exactly the same as the infamous "Regulatory Compliance Fee" that used to be charged by another local brokerage. It's a junk fee that has no place on the vast majority of settlement statements. One reader was kind enough to forward me a portion of their contract that showed the fee disclosed and pre-printed on the last page, presumably to make it seem legit. In two other cases that I looked at, that line was omitted from the contract but the fee was inserted on the settlement statement.

People, do not pay a fee to your agent or broker above the commission they are receiving unless it's a case of reduced or no commission and you want them to be paid an appropriate amount for their work. If you are presented with a contract or settlement statement showing a "Broker Only Commission", "Regulatory Compliance Fee" or any other fee paid to your broker by you, refuse to pay it unless you previously agreed to and are OK with paying it. No agent or broker is going to let the deal die because you refused to be robbed of $345 at closing.

Agents, don't be bullied into ripping off your clients. This is a shady practice and it won't continue without your complicity. There are plenty of good brokerages that don't encourage you to treat your clients poorly. Do the right thing.
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Beautifully Written Breath Hold Diving Techniques from Breathing.com

Release snorkel, pike, raise leg, begin to drop. A few strong slow kicks to get to negative and then, depending on the type/depth of diving, glide down to depth or kick a bit more to get through the top portion of the dive and down to depth. Mentally, as a natural low-level anxiety emerges, the game begins. The relationship towards the fear of air starvation becomes a game. It is "out there" in the consciousness, and I physically smile at it like an old acquaintance, neither friend nor enemy.

Ultimately, my control of, or my relationship to, these feelings begins to erode. It "becomes" time to go up. Small contractions may begin in my gut/diaphragm and throat. I begin to smile and to redouble my relaxing "non-effort efforts". Anxiety, tension and wasted movement are the tricksters that conspire to rob me of oxygen (and life). I smile at them, search for that relaxation, and rise. Kicking slowly, trailing my gun. Streamlined. I focus on the beauty of the light above and I move towards it.

Thursday, December 11, 2014

The Robberies Continue

For the second time in two weeks I've witnessed a buyer being ripped off by their agent. The crime: a junk fee tacked on the settlement statement among the dozens of other, legitimate charges. If the buyer was told about and agreed to this fee in advance, it's still wrong. I don't know if the broker lets the agent decide whether to charge the client or pay it out of their own pocket. Agents working for a broker who charges them a transaction fee in addition to skimming a cut off the top of their commission are being ripped off. Agents who pass on the fee to their client when a substantial commission is already being paid are ripping off the client. Long-time readers of this blog will remember that this exact distasteful practice by my former broker (one of the big franchise offices) was the impetus for the opening of Walker Bagwell years ago.

I understand why some agents are tempted to pass the fee along. In this particular case, the buyer's broker is receiving $4920.00 commission from the seller's broker. Depending on the agent's split with the broker, if the agent pays the $345 "Broker Only Commission" there's a good chance the agent's take-home pay (before taxes) will be less than half the original $4920. Still doesn't justify ripping off the client. Agents, do the right thing or look for a broker who doesn't see you as just another revenue stream to squeeze and massage.

The photo is of the north side of the Cocoa Beach Pier yesterday, Dec. 10, midday, high tide. Surf was big and clean and, as is usually the case at the Pier, easy enough for Grandma to catch a head-high peeler. Things were a little more intense and consequential a few miles south where the north swell was hitting directly. The epic conditions continue today.

"Living is easy with eyes closed,
Misunderstanding all you see." ____John Lennon

Saturday, December 06, 2014

Status Quo

It's December 6 and the Cocoa Beach Christmas parade will shut down southbound A1A through downtown for a couple of hours this afternoon. Small town America at it's core.

The MLS tells me that there are 245 condos and townhomes for sale in Cocoa Beach and Cape Canaveral this morning. This is the same number of units that have closed since July 21 this year. That's the entire inventory selling in 183 days, a tight market to put it mildly. Looks like 2014 will come close to matching last year's record-breaking 660 units with 631 closed units so far, as of this morning. Activity slowed considerably in November with only 38 units closed which is right in line with last year's 37 units.

Oceanfront and riverfront units continue to dominate the landscape with ocean units ranging from $240,000 for a direct 6th floor handyman 2/2 at the Sands to a 2nd floor southeast corner Sol y Mar 3/3 that closed for $750,000. Just three years ago a same floor plan corner unit on the 3rd floor closed for $447,000. That, ladies and gentlemen, is some serious price recovery.

Others sales of note included:
A 3rd floor southeast corner 3/3 in the ten year old Ocean Oasis in downtown Cocoa Beach for $600,000.

A smaller but totally remodeled 5th floor southeast corner Windrush 3/2 for $460,000.

An upgraded 5th floor direct river 3/2 corner at Solana River closed for $390,000 after just 23 days on the market.

A 4th floor direct river River Bend 3/2 in south Cocoa Beach sold for $350,000.

A few blocks north, a remodeled 3rd floor direct ocean 2/2 at Waters Edge closed for $345,000.

A few more blocks north, still in south Cocoa Beach, a remodeled 3rd floor direct ocean Sun Club 3/2 went for $329,000.

There were eleven closed single family homes in the month at prices from $194,900 for a bank-owned little beauty in Cocoa Isles to $450,000 for a totally remodeled canalfront 5/2 pool home with dock and boat lift.

Of the 49 total residential sales, seven were either short sales or foreclosures. Of the 304 active for sale residential listings of all property types, five are short sales and 19 are bank-owned. The short sale chapter in our boom, bust and recovery history is drawing to a close.

If you'd like the full details and photos of all or specific closed sales, shoot me an email.

Don't forget; parade at 2 this afternoon downtown Cocoa Beach.

"The truth will set you free, but first it will piss you off."  __Gloria Steinem.

Sunday, November 30, 2014

Condo Fee Ripoff...or Not

"I'm not looking at condos because the fees are a ripoff." I heard this one again this week. It's a common sentiment but is less based in fact than in ignorance of exactly what a condo fee covers. There are plenty of good reasons for preferring a single family home over a condo but the existence of a condo fee shouldn't be one. That nasty condo fee usually covers insurance on the building, water and sewer, lawn and landscape maintenance, basic cable, sometimes WiFi, pool maintenance and reserves for future major expenses like painting, roof, parking lot and driveway. In almost every one of the many comparisons that I've done, the monthly costs of owning a single family home have matched or exceeded the average monthly condo fee. Not all condos fund reserves but those that don't have respectively lower fees.

The average homeowner rarely has a discipline for setting aside reserves for future major expenses. Replacing a roof on a condo might be entirely funded from the reserves without the need for an extra assessment. That average homeowner will be pulling out the checkbook and stroking a big check when the roofer presents his invoice. Same for painting the house or cutting down a damaged or diseased tree or replacing a pool pump.

I'm not making a case for condos over homes here. Families with several big dogs or needing four or more bedrooms may not have many, if any, condos worth considering. My intention is to educate those who haven't accurately considered the differences in expenses.

Speaking of education, the gas stations at both forks in A1A in Cocoa Beach (4th St. North & 21st St. South) continue to gouge customers on premium gasoline. If your vehicle uses premium gas, you'll save around $.40 a gallon by getting your gas at the Sunoco at 1st St. South.

The Thanksgiving weekend Cocoa Beach Art Show was a great time for all yesterday and continues today. While the Space Coast Art Festival moved to the Port to attract out-of-towners and cruise passengers, the Cocoa Beach locals collectively ignored it and swarmed the downtown festival as they've been doing for 53 years. Most of us are happy to enjoy the hometown feel and the chance to visit with friends and neighbors as we stroll the streets. That vibe can't be recreated elsewhere, especially a location that requires Cocoa Beachers to drive. We tend to favor bikes, skateboards and walking for our transportation. Good luck to the other Festival. I'm sure it was well attended and will continue to thrive in it's new venue.

"You're less pressurized - the cabin tends to be pressurized to the equivalent of a few thousand feet. You expand, not contract. That's why you tend to get a bit gassy on planes. Flight attendants have mastered the art of stealthily farting as we walk down the aisle - a practice generally known as "Crop Dusting"." 
___flight attendant in response to the Food Babe's error-ridden blog on airline meals
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Thursday, November 20, 2014

2014 Buyers, You May Be Owed Money

Buyers who closed on property in 2014 before November may be owed money from the seller. In Florida our property tax bills for the year arrive in November. For closings before then, property taxes are prorated based on the previous year's bill and the seller's portion of the unpaid taxes (the period from January 1 through day of closing) is credited to the buyer.

Buyers and sellers both sign a document at closing agreeing to pay the other party the difference in the actual tax bill and the estimated figure used at closing should the shorted party pursue it. During a period of rising property values such as the present many buyers will be owed money from the seller as taxes rise. The most significant differences will be for properties that were previously homesteaded with artificially low taxes. Closings that happen later in the year will have accrued larger differences, if any, than those that closed earlier in the year.

I looked at recent closings on the property appraiser's site this morning for a good example. I found a Cocoa Beach oceanfront condo that had been homesteaded for years and closed in September this year for a little over $300,000. The ad valorem portion of the property taxes was $1874 in 2013 based on a homesteaded taxable value of $129,000. This was probably the figure the closing agent used to prorate the taxes for the September closing. When the new owner's 2014 tax bill arrived this month, the new taxable value was $252,000 and the tax bill had increased to $3958. If the closing agent used the 2013 tax figure for pro-rations, the new owner is owed around $1450 from the seller. In order to get this money he needs to contact the seller and/or the closing agent to request it. No seller is going to send a check if not asked.

Of the last 15 recorded condo closings in Cocoa Beach, only four had taxes increases large enough to amount to over $250 owed the buyer. My example above was the only one with more than a $400 difference. A couple of hundred dollars might not be worth the trouble but $1450 certainly is. New owners who closed before November should check the tax history of their property at the Property Appraiser's site by looking up their property and clicking on the "Taxes" tab on the left of the property page to get to a history of property taxes. If the 2014 ad valorem taxes are substantially more than the 2013 figure the seller may owe the prorated difference.

After approaching 50 degrees Tuesday night, temps are forecast to bump back to 80 by Sunday. Nightly room rates are at their lowest of the year right now for anyone needing an escape from the snowbank. We're having dueling Art Shows next weekend with the traitorous Space Coast Art Festival newly relocated to the Port while a new downtown festival The Cocoa Beach Art Show will pick up where the backstabbers left off. It's an easy decision which show to attend for most locals. Bring the kids and the dog and I'll see you downtown.

In 19 years of pro basketball Shaquille O'Neal only attempted a three point shot 22 times and sank just one of those. Know your weaknesses and use your strengths.

Tuesday, November 18, 2014

Preceeding the Snowbirds

 A quick non-real estate related post. We have a few  magnificent frigatebirds that summer somewhere at the Cape and are often seen in the summer months flying high above the Canaveral Bight, almost never more than two at a sighting. Yesterday the sky along the ocean shore in Cocoa Beach was a steady stream of these giant birds heading south. Frigates summer as far north as North Carolina so I imagine the dozens that I saw during lunch were northern-summering birds whose southward migration was triggered en masse by the approaching severe cold front. Whatever the reason, it was very cool to see this unusual sight in Cocoa Beach.

"Never approach a dock at a speed greater than you're willing to hit it."  ___Capt. Joe

Tuesday, November 11, 2014

The Seller Always Wins...IF

Real Estate Myth: A buyer who purchases a property directly from the listing agent is more likely to get a good deal because the listing agent may cut the commission since she gets both sides of the deal.

About that. I recently found this comment on a popular real estate forum from a top-producing listing agent, her words, verbatim, in blue.


"All buyers deserve to have proper representation and it's impossible if the listing agent is doing his job properly. My team and I are listing agents, and we ONLY represent the seller. There are always bumps in the road to the closing table, and buyers without representation are at a great disadvantage. Our seller will always win if the buyer is without representation.

Listing agents, do not encourage buyers to work directly with you. It's not to anyone's benefit, especially yours. The clean deal is the goal."  

Real Estate Truth: Buying a property from the listing agent makes as much sense as allowing the district attorney to represent the defense while leading the prosecution. Neither side should expect to get the most favorable result. Not only will a buyer probably fail to get the best deal when purchasing through the listing agent, he may find himself with his escrow deposit unnecessarily exposed and with terms less than optimal. Even if the listing agent cuts her commission in half, she is not allowed to advocate for the buyer in the negotiations. In fact, she cannot tell a buyer that the seller will take less than the buyer just offered even if she knows it. When I am representing a buyer I am obligated to use everything I already know and that I can find about the property and the seller in the battle to get the best deal for my buyer.

In a typical week, I am talking to listing agents, seeing properties and negotiating multiple offers. Not all of these negotiations result in accepted contracts. However, those failed negotiations do result in knowledge about those properties. That knowledge can be a powerful edge in subsequent negotiations for the same or similar properties. The result may be a lower price and/or better terms for my buyer. The listing agent can't share knowledge with a buyer that will give the buyer an edge and is certainly not going to beat up her seller trying to get a buyer a better deal. I am happy to. In fact, I am bound by my relationship with my buyers to do just that. All buyer’s representatives may not be as aggressive as I am, but, the good ones will almost always hammer out a better deal for their buyers than the buyers could get on their own through the listing agent.

Real world example; A condo purchaser in Cocoa Beach went directly to the listing agent, bargained really hard and somehow got the agent to reduce his commission to $1000 total for both sides of the deal and closed feeling good about his savings. I closed for a buyer on an identical unit in the same building in better condition a few weeks later for over $15,000 less. The kicker; it was listed for the exact same price as the first one.

Folks, you may not like real estate agents. Heck, I don’t like most of them, but, if a bulldog buyer’s agent can save you money, pinch your nose and get the deal done rather than shooting yourself in the foot in a misguided attempt to reduce the commission. I'm not alone in my opinion about buyers using the listing agent but it's not common for listing agents to advise a buyer that they should have their own representation. The lure of a bigger check is too great for most. Having said all that, an honest agent can serve as a transaction broker, advocating for neither side and pilot a deal to closing with neither party being harmed or at risk during the process. If you trust that the listing agent is honest and you're getting the best possible deal without unnecessary risk, have at it. If you're uncertain, do yourself a favor and get your own representation.

Cliff's Notes version; "...seller will always win if the buyer is without representation."

"Careless shepherd make excellent dinner for wolf."  ___Earl Derr Biggers

Tuesday, November 04, 2014

Strong Despite

October was surprisingly strong for property sales in Cocoa Beach and Cape Canaveral. The Cocoa Beach MLS shows a total of 59 condo and townhome units and 12 single family homes closed in the month. That's considerably more than I was expecting. Besides the high number of sales, the percentage of sales financed with a mortgage continued to increase with almost half, 38, buying with borrowed money. Just three years ago close to three quarters of all property purchases were with cash.

Short sales continue to dry up with only one short sale closing in October. Foreclosure sales increased slightly with 13 bank-owned units selling. Note that Fannie Mae ended the Homepath mortgage program in October so we won't be seeing any more of those low down payment, no appraisal loans on future foreclosure sales. Today's inventory of all property types is 9% short sales and foreclosures.

Inventory is still decreasing with 242 condo and townhome units and 59 single family homes for sale today in our two cities. The majority of direct ocean units sold in October closed for prices in the $200 to $240 per square foot range. There is considerable buyer interest in direct ocean units at the moment with little resistance at those price levels but their searches are butting up against the inventory shortage. Sellers who price in the range of recent sales are selling their properties in a few days. I see nothing on the horizon to change this trend. Successful buyers need to be smart, decisive and aggressive if hoping to get a good one. Good luck out there. Contact me if you need help putting together a strategy.

"And I do believe it’s true,
That there are roads left in both of our shoes."  __Death Cab for Cutie

Friday, October 31, 2014

Buyer Shall Pay...

I saw an offer a couple of weeks ago with the phrase, "Buyer shall pay a $295 processing fee to 'Name Withheld' Realty" inserted in the special clauses section by the buyers' agent. The buyers had signed the offer and apparently were OK paying their agent this junk fee on top of the 3% he would be making on the transaction. I've discussed these junk fees before but haven't seen one in a while. Folks, if your agent is asking for a fee on top of his commission you might need a new agent.

There are situations where a bank, greedy listing agent or FSBO seller may be offering no or very little commission to the buyer's agent. In those cases, a buyer may need to make up the difference to their agent. Tacking on a blatant junk fee, no matter what it is called, on a deal where reasonable commission is being paid shouldn't be tolerated. One of the national franchises in Cocoa Beach used to pressure their agents to tack a $495 "regulatory compliance fee" on all their clients, both sellers and buyers. Many people paid the legitimate-sounding junk fee not knowing they were being blatantly ripped off. Clients who questioned the fee didn't have to pay it. Those who didn't question had their pockets picked. Ignorance is often costly.

The big (20 to 40 pounds) bull redfish are schooled up just outside Port Canaveral and are feeding voraciously. Anglers have been catching and releasing these monsters during the perfect windless conditions this week. Anyone who'd like to catch a redfish of a lifetime can do a half-day charter out of the Port right now and check that item off their bucket list.

Gas prices in Cocoa Beach retreated below $3 per gallon at several stations this week. Motorists buying premium gasoline continue to be gouged by the stations at the north and south forks in A1A. Premium at these stations hovers around 40 cents more per gallon than at the Sunoco at 1st St. South. As long as people pay those prices, they will continue the gouging. Please don't.

"There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again." ___George W. Bush

Sunday, October 26, 2014

Backup, What is it Good For?

Backup contracts are widely misunderstood, in my experience. In simple terms, an executed backup contract is a contract that will automatically become primary if the existing contract fails or cancels. If the existing contract does not fail and closes, the backup dies. The backup buyer can cancel the backup at any point during the process prior to becoming primary. In a market like ours with more demand than supply, a savvy buyer should be ready to deploy a backup offer in the right situation. That situation often happens when a buyer loses a desirable property in a multiple offer situation. It can also happen when a buyer realizes that the property that best fits their criteria is already under contract.

What are the drawbacks for a buyer making a backup offer? Other than the small amount of time it takes to write and negotiate the backup or the slim odds of it becoming primary, I can think of none. A buyer does not usually make an escrow deposit at the time of making a backup offer and most continue their search. If they find a property they like better, they negotiate for that one and, if successful, cancel the backup. If a backup offer is stronger than the primary, higher price, better terms, etc., then the seller is less likely to make any concessions for the first buyer. That means when the first buyer makes a request for post-inspection repairs or an extension to closing date, those requests are probably going to get denied by the seller increasing the odds that the first buyer will cancel. Sellers should welcome backup offers first for insurance of a closing and second for post-contract bargaining strength with the first buyer.

Our TL;DR takeaway: Buyers and sellers should employ backup contracts when suitable as another tool for successfully buying or selling property.

I took the pic at the top last week in the northern Abaco islands during a boat delivery from Florida. It was a smooth crossing with little to no wind the entire trip. Not so good for sailing but, with reliable diesels, not a problem. The beauty of these very close islands is breathtaking and off the radar for most Floridians. A shame for them but a plus for those of us who visit this special place.

"A goal is not always meant to be reached, it often serves as simply something to aim at." ____Bruce Lee

Wednesday, October 15, 2014

Declination

Sales of residential properties in Cocoa Beach and Cape Canaveral continue at a steady pace. We finished September with 56 closed condos and townhomes according to the MLS. Of those 56 sales, 36 closed for cash. Eleven were distressed. Only one of those distressed exceeded $200,000. The highest prices paid were $482,500 for a 5th floor north facing Artesia 3/2 and $400,000 for a 6th floor direct ocean Waters Edge 3/2. Half of the sold units were on the market less than 50 days and 16 sold in less than a month.

There were 16 sales of single family homes and half duplexes. Seven closed for cash and there were zero distressed sales. Five sold in less than a month on the market.

There are currently 52 single family homes and half-duplexes for sale in the two cities. Three of those are distressed. Ten have been for sale longer than 250 days.

There are 225 existing MLS listed condos and townhomes for sale in Cocoa Beach and Cape Canaveral this morning, an all time low. Of those 26 have been for sale for over a year so we can assume they are priced too high to sell. That leaves 199 potential targets for a buyer looking with no other restrictions. By the time a buyer filters by location, size, price, etc., her choices are slim, to put it mildly.

We are showing 90 units as contingent or pending so that little backlog will support our closed sales moving forward in spite of the low inventory. As always, those looking to purchase, need to know what they're looking for and what it is worth in order to move quickly. Out of town buyers are at a disadvantage unless they are willing to go ahead and negotiate for a property without first physically stepping foot in it. In the time it takes the average person to book a flight and get here, any priced-right desirable property will have a contract. A good buyer's agent can make that distant buying process easy and without risk. Note that that doesn't include the listing agent for any property. She isn't allowed to write an offer that protects a buyer if that puts the seller at a disadvantage.

The mullet are still running southward along the beach in reduced numbers although recent winds have made surf fishing impossible or very difficult. I was able to land two thirty pound plus redfish in the ocean just outside Port Canaveral last week which were released and a nice flounder which was not. Today there is a category three hurricane, Gonzalo, well east of the Bahamas following the usual north to northeast curving track. Hopefully we will enjoy favorable winds when the swell reaches our coast next week. Surfers are on full alert. Second cold front of the year to pass through today which should send our nighttime temps into the 60s. Ho hum.

"The truth is that the world turns by having people use their skills to do things for people that can't do them themselves. It's called being productive. It's the reason why a high school drop out can make more than a PHD holding individual." __Pointlessoso

Saturday, October 04, 2014

Escalation, My Brother

Big changes continue to happen in the world of online real estate. The dust had barely settled on the purchase of Trulia by Zillow when we got the news (no pun intended) this week that Rupert Murdoch's News Corp. was buying Move Inc. For those that don't know, Move, Inc. licenses the domain Realtor.com from the National Association of Realtors and operates that website. They also own the nation's largest MLS syndication service, Listhub, and just four weeks ago announced the acquisition of Point2, the second largest syndicator. Syndicators are the conduit for MLS listing data to non-MLS sites like Trulia and Zillow. Point2 handles the syndication of approximately 900,000 MLS listings in the U.S. from 112 different MLS systems. Combined with Listhub's existing MLS agreements, Move, Inc. now controls the distribution of 85% of the MLS data in the United States. Guess who happens to be Zillow and Trulia's primary source of listing data. Yep, it's Move, Inc. Murdoch is not known for his kinder, gentler practice of business so this development must have the Zillow boys staining the armpits of their Alexander Price rags. And to think they could have had Move for a fraction what they just paid for Trulia.

Waiting in the wings is the new and improved Homesearch.com, owned by Nationstar Mortgage that was scheduled to be relaunching about now in a bid to capture a bigger piece of the pie that Zillow has been gorging on. I reckon News Corp.'s move (again, no pun intended) this week may mean a possible delay or rethinking of that relaunch. The eventual outcome is uncertain but we can be sure that the world of real estate, both online and on the street, will be far different in the very near future. The corporate barbarians are at the gate and they have dollar signs in their eyes.

Rupert, if you're reading this, southcocoabeach.com could make a nice garnish for your growing real estate portfolio. Have your people call mine or we can meet at Coconuts and talk price man to man over a frosty.

"The body always surfaces."  __Steve Romano

Thursday, September 25, 2014

Where It's At

A brief summary of the current market trends in Cocoa Beach and Cape Canaveral. All data is from the Cocoa Beach MLS.

We began the year on January 1 with 303 condos and townhomes for sale in our two cities, 10% of those distressed (either short sales or foreclosures). Since then a total of 491 units have closed, 16% distressed. The higher closed percentage of distressed is explained by the high number of short sales contracted before the end of 2013 but closing in 2014. The trend of cash purchases dominating the condo landscape has continued with 63% of all condo purchases so far closing for cash. That percentage has stayed between 63% and 71% for the last three years.

The inventory this morning stands at 251 condos and townhomes, 19 of those not yet built. Of the 251, a total of 9% are distressed.

Single family home trends are slightly different. Since the year started, 102 have closed with 45% of those purchased with cash, 18% of the total distressed. Inventory right now is at 54 properties, 11% distressed.

We seem to have returned to our normal fall slowdown in activity. During the years following the crash, the fall was almost as busy as the spring and summer but that trend hasn't expressed itself this year. New listings remain alarmingly low. Buyers who are looking now, as always, need to have financing preliminaries taken care of (if not paying cash) and be prepared to move quickly when an attractive opportunity appears. If it's priced right, recent history tells us that it will be sold in a few days. Out of town buyers would be well advised to have a buyer's agent they can trust who can visit likely targets immediately and advise whether to offer or not. Waiting to get here in person to view a desirable property will reduce a buyer's chances of winning the race. It's not a risky nor uncommon practice to write an offer on a property sight-unseen with an inspection period long enough to allow time get here to physically tour and inspect the property. If you need a buyer's agent you can trust to guide you through the process, I'm happy to help.

Price is almost always different than value. ...price is what you pay for an asset, but value is what you get. ___________Brian Nelson

Tuesday, September 23, 2014

Bought & Sold - Your Info

If you've ever looked for real estate on a website and requested info on a property you may have been harvested and sold without knowing it. We agents get emails and phone calls daily from companies offering to sell us your info for exorbitant prices. On the big three websites, ZTR, your request for info can go simultaneously to up to three agents who won't owe anyone any additional payment should you use one of them. They have already paid to be there in the margin hoping for your request. On dozens of less prominent real estate websites, the process is different. The dominating business model is selling the leads they harvest. Should you care if your info is sold to an agent? You're going to want an agent to represent you anyway. Well, when your agent is giving up a third to half of his potential pay check, his devotion to your needs may be less than enthusiastic. Below is an example of the type of agreement these companies want from the agent to whom your info is sold. I received this one this morning.
______________________________

We, the Originating Broker, have referred to you, the Recipient Agent, our Customer {CUSTOMER_NAME}, a potential buyer, seller or renter, whom we have procured through our websites, including www.somethingorother.com, and direct contact. You have agreed to accept the referral of our Customer,...  subject to, this Standard Referral Agreement ("Agreement").

 With respect to any Customer, their family member, or any related party (familial or not) introduced as a result of the original referral of the Customer whom We have referred and for whom You have agreed to provide brokerage services, You agree to:

 1. Share with Us thirty (30%) percent of all gross commissions ("Referral Fee") due to You for each side of the transaction where You represent the Customer, whether the Customer buys, and/or sells and/or leases/rents any real estate, for a period of twenty-four (24) months following your acceptance of the Customer ("Referral Period").
______________________________

Do yourself a favor and try to contact an agent directly rather than through a website. You deserve their total commitment to you. This includes the big franchise websites, most of whom have even more onerous referral arrangements with their agents. Here's a disgusting take on how the nation's largest brokerage is handling this process and their big plans for squeezing even more out of their agents and franchisees.

A small swell has lingered even after the great waves of last week retreated. Not nearly as big but still fun. I hope all who enjoy the warm water and waves of fall have been able to get out and partake. The mullet run is on in all it's glory so surfers who do venture out are sharing the lineup with billions of mullet and the larger predators who feed on them. Fishing from the beach is epic on days when the surf conditions allow.

"I've been poor and I've been rich.
The first one stung but the second one itched."
________________________Patrick Stump

Tuesday, September 16, 2014

Price High & Hope For a Miracle

If your vehicle uses premium gasoline you may want to take a close look at the prices for premium on the signs at the left. The Sunoco at 1st St. South was charging 33 cents less for premium yesterday when those pics were taken than the Chevron in south Cocoa Beach. Reminds me of asking prices on our MLS except that some people are actually overpaying for the Chevron premium.

Sales have slowed to a crawl in Cocoa Beach and Cape Canaveral with just 16 condos and townhomes closed in the first half of September along with six single family homes. That's not surprising as we've closed a total of 481 condos and townhomes and 108 single family homes so far in the year and inventory is, to put it mildly, depleted. There are 241 existing condos and townhomes for sale this morning. That's equal to the number of units sold in just the first 18 weeks of 2014. As I've mentioned before, if we strip out the over-priced listings that have been languishing on the MLS for over 9 months, the actual inventory is below 200 units.

There were some compelling sales among the 16 closed so far. Someone got a good deal on a direct ocean 2nd floor weekly rental 2/2 Cape Winds that closed for $175,000 as a short sale. It needed some TLC but will be able to generate good income for the new owners.

A big direct ocean 2nd floor corner 2/2 at Coral Seas sold for $324,900. It had 1608 square feet and a garage.

Another direct ocean, weekly rental 2/2, this one at Spanish Main, sold for $260,000. It had 1177 square feet and a garage and sold fully furnished.

A small 2nd floor direct ocean Diplomat 2/2 with 900 square feet closed for $250,000. It was nicely remodeled and had no garage.

An original condition 2nd floor Sand Dollar south view 2/2 at Royale Towers closed for $220,000. It was fully furnished and had a garage.

A poolside ground floor Cocoa Beach Club weekly rental 2/2 sold for $205,000. 1098 square feet and carport only.

A nice 2nd floor 2/2 direct Banana River Waters Edge West in south Cocoa Beach closed for $199,910. It had a garage and 1268 square feet.

A 2nd floor furnished direct river Banana Bay 2/2 with 1316 square feet and a garage closed for $189,000.

Two townhomes on Colonial Drive near downtown Cocoa Beach closed within two days of one another for $155,000 and $160,000. Both were 3/2 with a garage and the higher priced one was slightly larger at 1537 square feet.

Someone got a very cool remodeled and furnished Aqua Sea 1/1 a couple of blocks from the ocean in south Cocoa Beach for $100,000. On the high side for 700 square feet not on the water but a gorgeous little unit.

The fall mullet run is on in full force with gazillions of finger mullet running south along the shore. Mix those in with the bazillions of pogies already scattered just offshore and it makes it a good time to be a pelican or snook, tarpon, ladyfish, bluefish, spanish mackerel, jack crevalle or shark. All the latter can be caught from the beach with a live mullet, pogie or appropriate artificial. The big swell from Hurricane Edouard will arrive sometime tonight so don't expect much to get done in this town tomorrow or Thursday. The boys will all be calling in sick.

"Yeah, well, you know, that's just, like, your opinion, man." The Dude from The Big Lebowski

Tuesday, September 02, 2014

Sales and Shenanigans in August

Condos sales in August in Cocoa Beach and Cape Canaveral continued at a slower pace with 49 recorded sales as of this morning in the Cocoa Beach MLS. That's 30% fewer units in July and August 2014 than in the same period in 2013. Prices on the other hand continue to increase. A Sandcastles 7th floor unit sold for $550,000 matching the highest price of the last ten years in that complex set back in the heady market of 2006.

Other sales of significance included the following:

  • A top floor (4th) Meridian direct ocean 3/2 with 2072 square feet and garage sold for $850,000.
  • A 5 year old direct ocean, 2nd floor Ocean Cove 2 BR, 2.5 BA in south Cocoa Beach with NO garage sold for $425,000.
  • An oceanview 4 BR, 3.5 BA, duplex in Cape Canaveral with 2771 square feet and a two car garage closed for $415,000.
  • A fully furnished 3rd floor direct ocean Canaveral Towers weekly rental 3/2 with 1417 square feet and a carport closed for $315,000.
  • A furnished 10th floor direct ocean Xanadu 2/2 with 1761 square feet and garage sold for $310,000.
  • A furnished, direct ocean 5th floor Stonewood 2/2 with 1317 square feet and garage closed for $305,000.
  • A furnished 3rd floor direct ocean Sea Oats 2/2 with 1200 square feet and no garage sold for $305,000.

Based on those last three, it's looking like the market is comfortable with the $300,000 neighborhood for direct ocean 2/2 units in original condition above the ground floor. Remodeled units are bringing more, as always.

Now for a couple of head-scratcher sales recorded in August 2014.

A direct ocean 1st floor Spanish Main 3/2 sold at online auction for $199,000. What's interesting about this one is that Nationstar was holding an offer of $225,000 as a short sale when they decided to go ahead and foreclose and auction the unit. The auction appeared to have no bids and disappeared from the site only to show up weeks later as closed for $199,000. The buyer who offered $225,000 nor his agent was ever contacted by Nationstar.

In another crazy online auction Fannie Mae sold a direct ocean 2nd floor Driftwood 2/2 for $126,000. That's $100,000 less than the yet-to-close contract on an almost identical unit two doors down. To compound the craziness, this FNMA unit was first auctioned off in April with a winning bid of $192,000. That buyer failed to close but there were two other bidders who had each bid over $170,000 who were never offered the chance to reengage. A subsequent "quiet" auction produced a buyer who won for $154,000. Fannie Mae screwed up the first right process and lost that buyer and then contracted with a new auction firm who advertised an "in-person" auction that never happened. A "high-bid" contract was produced after the secret auction for $120,000 plus $6000 buyer fee. None of the earlier bidders can figure out what happened and none were ever contacted about either of the last two auctions. All were willing to pay the considerably higher numbers that they had previously bid. Someone needs to tell Fannie Mae that there are much easier and more fun ways to lose $100,000.

Snook season opened yesterday and the first stray schools of mullet are already showing up. I watched giant tarpon crashing schools this morning in south Cocoa Beach well within casting range of the beach. Surf fishing will be the best it gets in the next several weeks as the annual mullet run kicks into high gear and all the bigger predators move in close to the beach to feed on them. I'll be hoping for a tasty snook or two. A big tarpon from the beach, although inedible, is a nice consolation catch.

"If you don't know how to turn off the safety, being unable to fire the gun is the intended result." __unknown

Monday, August 25, 2014

How to Choose a Real Estate Agent


I struggled with the title of this post. I considered "How NOT to Choose a Real Estate Agent" but (uncharacteristically for me) discarded that in favor of a positive title although the intent of the post really is about what NOT to do when selecting an agent. I briefly touched on this in a post a couple of months ago but figured, considering the strong shift taking place, that it deserved revisiting..

The thing that got me on this subject again was the recent big increase of properties being listed by out-of-town agents. Over the years I've worked in the Cocoa Beach and Cape Canaveral market, most property listings here have been with local offices. I suspect most US markets have been the same. Makes sense to have a broker who knows the market and is readily available for buyers and their agents. Things are different now and the change happened quickly. Over a third of the new listings in the last two months in Cocoa Beach and Cape Canaveral are with agents and/or offices in other cities. There have always been some agents in other cities in our county who would have the occasional listing here, even some who did quite a bit of business, but never the proportion that we're seeing now. What happened? Consumers embraced the big online real estate sites for their real estate research and in the process discovered what appeared to be an easy way to find a local Realtor in their target market. The problem? The sites allow anyone willing to write a monthly check, no matter their location or qualifications, to buy their way into the list of local agents.

I searched Zillow this morning for a Cocoa Beach buyer's agent. (Results were similar for seller's agents.) Out of 13 "Trusted Pros" on the first page of 500 total results, only four work in offices in Cocoa Beach or Cape Canaveral. Note that the recommended agents rotate for every search so your results may differ from mine but, after doing several searches, it's obvious that my results are typical. Two of the Cocoa Beach "Trusted Pro" agents work out of offices in other counties over an hour's drive from Cocoa Beach and another seven work out of offices in other cities in our county. Four of the recommended buyer's agents had zero sales in Cocoa Beach or Cape Canaveral in the last 12 months and another agent had one. How did they get recommended? Easy. They pay Zillow to be there. No skills, experience or even physical proximity required. I could buy my way into recommended agent status in Key West or Pensacola if I chose. My value to a buyer in either of those markets would be considerably less than most of the experienced local agents but, that wouldn't stop an online advertiser from accepting my monthly check and proclaiming me a "Trusted Pro" in the area. The same is true for these out-of-town agents on the Cocoa Beach agent list. Does it matter? If I'm landing in Tegucigalpa I'd much rather have a pilot who has experience with that hairy airport than a guy who is making his first landing there. The more experience with that runway, the better. An agent unfamiliar with our market might not kill you but it is not in your best interest to have her in the left seat.

Feel free to use Zillow and other online real estate sites to look for a buyer's or listing agent but do yourself a favor and at the very least select an agent in the actual town you plan to buy or sell in. And, remember that there are active experienced agents in every market like myself who choose not to pay to be included in the Zillow cluster. You may overlook your very best choice if you limit your research to paid ads. I may be forced to surrender at some point and pay to be agent number 501 in Cocoa Beach but for now I prefer to be excluded from the list even though I have hundreds of successful landings and takeoffs here and know the terrain like the back of my wrinkled hand. For anyone looking to buy or sell a place here, you'd be well-served to extend your search for an agent outside the "Trusted Pros".

"Being the quiet, mysterious one doesn't get the ladies unless you happen to be high-end handsome." __applicable metaphor

Thursday, August 21, 2014

Persistance

The slowdown in sales that I commented on in my last post, Cooling Trend, is persisting. The rate of new listings is not keeping up with the rate of sales. The inventory of  condos and townhomes in Cocoa Beach and Cape Canaveral this morning is 267 units if I include 19 non-existing, pre-construction units and 9 over-priced units that have been for sale and sitting empty since their construction six and seven years ago. That leaves us with 239 units of which another 33 have been for sale longer than nine months, several for years, indicating unrealistic pricing. An overflowing handful of other listings have had their days on market manipulated to appear as not having been for sale forever so the "really for sale" inventory of condos and townhomes in our market is below 200 units, probably below 150 if we filter out anything asking 20% or more above market value. That dearth of inventory, not a lack of interested motivated buyers, is the reason for our current sales rate of about one condo closing per day. We averaged over two per day the first half of 2014. I don't see any near-term catalyst that will be improving that. If anything, we may see sales decline even more as we move into the fall months.

Back to the mid 90s today. I can't imagine living anywhere but the coast in Florida. No matter the heat, we can count on the cooling sea breeze by early afternoon most days. Get away from the coast and the heat index goes Richter. The theme parks and inland golf courses must be especially brutal this time of year. Thankfully, the Cocoa Beach Country Club course sits on an exposed peninsula in the Banana river so it is exposed in most places to any breeze.

Our next scheduled launch is a SpaceX Falcon 9 in four days. Check the schedule of all upcoming launches HERE. A tropical storm could be influencing our local weather by the end of next week. A poorly organized mass is approaching the Lesser Antilles right now and moving northwest but not expected to have favorable conditions for turning into anything significant. Meh.

"Someone who is nice to you but rude to the waiter is not a nice person." anon

Thursday, August 07, 2014

Cooling Trend

The crazy pace of sales in Cocoa Beach and Cape Canaveral has slowed. After a blistering first half of the year for property sales, July returned to a more sedate pace. My constant predictions about a coming slowdown have until now been entirely wrong. It seemed impossible that we could sustain an average pace of 63 sold condos a month with an inventory of around 250 existing units. Somehow we did until July. As of this morning, the Cocoa Beach MLS is reporting a total of 45 sold condos and townhomes in the month of July and 11 single-family homes. That's compared to 67 condos and 14 single families in June. There are 255 existing condos and townhomes for sale at the moment along with 19 very-optimistically offered pre-construction condos.

I expect the slowed pace to continue. Eleven of the 255 for-sale condos are bank-owned and six are short sales. The days of high numbers of distressed sales are, for the most part, behind us. We are at the lowest ratio of distressed offerings since the first short sale closed in our market in 2008. There are 27 pending distressed contracts yet to close so the boost in numbers from those will be inconsequential. While no one was looking, our market has returned to a healthy supply and demand dynamic. Demand exceeds supply by a good margin at the moment.

Of the 45 closed condo sales in July, 25 sold for cash. Only one of the sub-$100,000 purchases was with a mortgage. A quarter of the condo sales were at prices above $285,000 and a quarter were below $107,000. The higher priced sales were a good mix of ocean and river units.

There are currently 47 direct ocean listings. Six of those are asking $250,000 or less, most in that range in older buildings along Ocean Beach Boulevard. Twenty of the units have been for sale for over 300 days telling us that they are most likely overpriced.

I hope those of you who are surfers got to enjoy our first, brief hurricane swell this week as Bertha passed off our coast. Yours truly missed it completely while scalloping off Florida's west coast. On a bright note, the scallops are thick this year and my crew was able to limit out every day in less than an hour of snorkeling the grass flats. If you've never done it, it's a great activity for kids and adults alike and the bounty is very tasty.

"...one of the worst things society has done is name adipose tissue the same thing as a macronutrient."  comment on fat by a random Redditor

Tuesday, July 22, 2014

Big One Fails Again

It's happened again. A bushy-tailed loan officer promises he can loan on a condo and then discovers right before closing that the particular condo complex will not satisfy his bank's lending guidelines. The twist is that in this case the lender is local. I chant the "use a local lender" mantra constantly but it appears I need to qualify that. An overconfident, inexperienced local loan officer can blow your deal up just as effectively as the little lady's banker cousin back in Fond du Lac.

In this particular case the agent (not me) recommended a local lender who offers a specific loan product for unwarrantable condos, which this one was, to the buyer. The buyer elected instead to go with a local branch of the number one mortgage originator in the nation. The loan officer energetically claimed that he could do the loan. Remember the "Does This Make My Butt Look Big" post? He was just doing his job even though he didn't know there was no way his bank would loan in this particular complex. Any loan officer experienced with condos in our market would have instantly recognized that this condo-tel would be a problem, if not impossible, loan. The buyer didn't find out that the lender couldn't loan on the unit until well towards closing and is now scrambling trying to rescue the purchase through the originally recommended local lender.

Our takeaway here is that it is better to have a lender who can close the deal than one who promises the lowest rate or the bank with the most recognizable name. In addition, prospective condo buyers would do well to familiarize themselves with possible hurdles. My "Condo Mortgage or Root Canal" post from three years ago listed the major items that the lenders want to see in condo associations. A weekly rental unit may be attractive for the income possibilities but any condo that allows weekly rentals is going to be a mortgage challenge for multiple reasons. Ask your agent for recommendations for lenders who have products available for problem complexes.

I hope the surfers among the readers got some of the fun surf last Sunday. It was one of those rare summer surf days with a decent sized ground swell, clean conditions and all the waves one desired. Lots of smiles around town Monday. This coming Friday and Saturday are the last two days of our six day red snapper season in Atlantic waters. I got my one fish limit last Saturday with a 20 pounder and hope to repeat it again this weekend.

"Music was a lot better when ugly people were allowed to make it." ____Otis Gibbs

Tuesday, July 15, 2014

Back In the Saddle

 I'm back after a couple of weeks above and under water in the nearby paradise of the Abacos. It still blows my mind that the opportunity to put the only footprints on ten different beaches a day and to dive and swim in water as clear as air is just a little over an hour from here. If one's impression of the Bahamas is a cruise ship visit to Freeport or Nassau it's no more accurate than an impression of Cocoa Beach based on a visit to Ron Jons and the Pier.

 The final numbers for June were even more impressive than I last posted. There were 67 closed condos and townhomes in Cocoa Beach and Cape Canaveral in the month with a median price of $168,000 and 14 single family homes at a median price of $290,000.

The top 16 condo sales:

  • The top floor (17th) NE corner Stonewood, fully furnished 3/2 with 2170 square feet and a two car garage for $580,000
  • 3rd floor direct ocean Solana Shores 3/2 with 2095 square feet and a one car garage for $535,000
  • A top floor direct ocean, fully furnished Meridian 3/2 with 2072 square feet and a one car garage for $717,500
  • Remodeled 6th floor south facing SE corner C building Royale Towers 3/2 with 1860 square feet and a one car garage for $380,000. This one was taken out in first right of refusal.
  • Nicely remodeled 8th floor NW corner 2100 Towers 2/2 with 1600 square feet and a one car garage for $350,000
  • 5th floor direct ocean, two level Sunrise Tower 2/2 with 1457 square feet and a one car garage for $335,000
  • 7th floor original condition, direct ocean Las Palmas 3/2 with 1500 square feet and a one car garage for $332,000
  • 2nd floor corner, direct river Solana on the River 3/2 with 2187 square feet and a one car garage for $315,000
  • Beautifully remodeled 3rd floor direct ocean Emerald Seas 2/2 with 1602 square feet and a one car garage for $310,000
  • 2nd floor corner Solana Lake 3/2 with 1956 square feet and a one car garage for $300,000
  • 4th floor corner Bayport 3/2 with 2092 square feet and a one car garage for $297,500
  • Non-oceanfront Shorewood corner 3/2 with 1992 square feet and a one car garage for $290,000
  • 5th floor Solana on the River 2/2 with 2055 square feet and a one car garage for $289,900
  • Remodeled and furnished 10th floor direct ocean 2100 Towers 2/2 with 1200 square feet and a one car garage for $302,000
  • 6th floor partially remodeled, bank-owned, direct ocean Stonewood 2/2 with 1317 square feet and a one car garage for $275,000
  • Furnished, original condition, 2nd floor Royale Towers B building 2/2 with 1256 square feet and a one car garage for $274,900

Ten of the these units sold in less than 22 days on the market.

There are 281 condos and townhomes for sale on the MLS in our two cities with 15 of those yet to be built. Eight are short sales and 13 are bank-owned. There are 70 single family homes on the MLS. One is a short sale and four are bank-owned. Inventory is not sufficient to meet the demand so buyers can continue to expect to have competition for attractive listings. Feel free to contact me if you have questions or just want to bitch about some stupid comment or forecast I've made. I'm here for you.

"You can always count on Americans to do the right thing -- after they've tried everything else."  __Winston Churchill

Saturday, July 05, 2014

Happy Independence Day 2014

I can't imagine that it will come as any surprise to anyone familiar with the Cocoa Beach real estate market that June 2014 was another record month for closed properties. Not quite as many closed sales as May but it was the busiest June for closed sales in Cocoa Beach and Cape Canaveral since June 2005 with 64 closed condos and townhomes and 13 single family homes. That is as reported by the often tardy listing agents in the Cocoa Beach MLS. The number will likely increase as the slacker contingent drags back to the office next week and updates their listings. To put that in perspective, almost a quarter of the total condo listings in our two cities sold last month and slightly less than a fifth of all single family listings. Conservatively speaking, demand is far exceeding supply and the imbalance looks to continue. I will detail specific sales in a follow up post.

Hope everyone is enjoying the long holiday weekend and operating outside the stupid zone. Party defensively and point your fireworks down range.

“Happy 4th America. I love ya, ya old coot. Have fun mixing liquor and fireworks today and don’t forget to STOP DROP AND ROLL!”  ____Jim Carrey

Monday, June 23, 2014

Welcome To Summer

The tally on closed condo sales for last month in Cocoa Beach and Cape Canaveral wound up at 73 units according to the Cocoa Beach MLS. That total ties with last July as the most condo sales in nine years. That's a big deal. Back in June 2005, the last time we had more closed sales in a month, there was three times the inventory for sale and mortgage qualification was still in the "need only fog a mirror" level of scrutiny. In June 2005 four out of five condo sales were financed. In May 2014 only one third of the condos and townhouses sold were financed. In 2005 condos were selling for a huge premium to today's prices, some for more than twice today's price. Those crazy prices began retreating in late 2006 for most buildings and, after bottoming a couple of years ago, are inching their way upward in most complexes.

A few examples:
  •  In June 2005 a Cape Winds 4th floor 2/2 closed for $413,000. A similar condition 2nd floor unit recently closed for $220,000.
  • Windjammer 3rd floor 2/2 sold for $450,000. Two units are available today asking below $300,000.
  • 5th floor Stonewood 2/2 sold for $495,000. A 16th floor same floor plan unit sold recently for $275,000
  • A 5th floor partially remodeled Stonewood Sand Dollar 2/2 closed back then for $530,000. An exquisitely remodeled 5th floor Sand Dollar just closed for $384,700.
Those of you hoping to buy have a much reduced supply of units to pick through. Don't despair. Prices aren't running away and we are getting just enough new listings to handle the demand. There are 262 existing units currently for sale in our two cities with right around 100 in ocean complexes. Know what you're looking for and be realistic with expectations for price. You're not going to have to pay anywhere near 2005 or even 2010 prices but don't expect to pay less than the last similar unit. It pays to discuss recent sales of similar properties with your agent so you'll be able to recognize a fair deal when one presents itself. As always, if planning to get a mortgage, talk to your LOCAL lender before you start the process. Know what's going to be required for a down payment and don't waste your time looking in complexes that won't qualify. That cute little Cape Winds unit may be perfect for you but Roger at First Muskellunge National might not realize that there is no secondary market for condo-tels until days before closing. He'll apologize but he won't be able to close. A local lender would know that your hopes for a 20% down mortgage on that unit are not likely to happen. He might offer alternative financing solutions before letting you waste money on appraisal and inspections. Your buyer's agent, if she knows her stuff, will be able to tell you which complexes won't or might not qualify and can save you wasted time. If she can't, pink slip.

"I've learned that self-interest is the most powerful force in the world. People in unethical, predatory, and nonsense jobs will do mental gymnastics to convince themselves they're doing the right thing. Those who criticize the behavior of  "greedy Wall Street bankers" underestimate their tendency to do the same thing if offered an eight-figure salary."  ___Morgan House

Friday, June 20, 2014

Are You a Tax Evader?

Unless you have a written lease for longer than six months, when you rent your Florida property you are required to collect 6% tax for the State of Florida and the appropriate tax for the county, 5% here in Brevard County. That tax must be remitted with the tax returns by the 20th of every month to both the State and the County. The State has employees who regularly cruise the vacation rental websites like VRBO and Homeaway looking for owners whose properties are being offered for periods of less than six months. If you'd like to come into compliance before you get the nasty letter or phone call, visit MyFlorida.com for state license application and sales tax number. You'll also need to check with your county (Brevard County info here) and city to make sure you're in compliance with everyone. Here is the form for Cocoa Beach. It's a pain in the butt but it's the law.

Locals with kayaks and the knowledge have been catching giant tarpon and monster jacks off the beach in the calm conditions of the last few weeks. A hundred pound plus silver king out of a kayak is an experience not soon forgotten.

Monday, June 09, 2014

The End of the World as We Know It

The ground that the US real estate industry is planted upon has begun to shift. The tremors we've been experiencing in the online world of real estate seem to predict a major event sooner rather than later.

Just a few years ago, Realtor.com was the number one website that consumers used to search for real estate. Most MLS systems including ours share their listings with Realtor.com. Not long ago the Brevard MLS began sharing listings with several other websites with the thinking that more exposure was better. These outside sites, Trulia, Zillow, Homes.com among others, took our listings (freely given by us, BTW) and presented them on their websites that were usually more user-friendly than the clunky consumer side of our MLS. They built traffic and popularity quickly. Zillow cleverly created an automatic estimate of value of all properties, the Zestimate. It has been notorious for inaccuracy and Zillow has admitted as much. However, the inaccuracy, whether intentional or accidental, has been a brilliant viral tool as it is one of the most discussed topics on practically every online real estate forum. Zillow is now firmly in the number one spot as the highest trafficked real estate website and is getting twice the monthly visitors of Realtor.com.

Once they gained traction and traffic these websites began selling advertising back to the very agents whose listings made up the content of the site. For a fee, any agent, listing or otherwise, can have their smiling Glamour Shot placed in the margin next to listings that consumers view. Consumers can also search for agents and read reviews supposedly from past clients. Agents have to sign up (for free) to show up in the list of agents. Once signed up for free the sales reps begin repeatedly calling to sell upgraded placement. One agent told me that a sales rep at one of the sites told him that they would remove any bad reviews if he signed up.

Let's test the agent search on one of the sites I mentioned. Searching for an agent in Cocoa Beach I get 492 results. Holy cow! That's like 4% of the population of Cocoa Beach. Nine of the thirteen agents listed on page one of the results work out of offices in cities other than Cocoa Beach or Cape Canaveral. I have never been involved in a transaction with nor even heard of any of those nine agents. [Note: When choosing an agent online, it makes sense to make sure they actually work in the market they are claiming to service. Big red flag is an office in another city.] Guess who isn't among the 492 Cocoa Beach agents? Yep. Yours truly. Representing hundreds of buyers in Cocoa Beach over many years is not enough to show up in a list of Cocoa Beach agents because Homey won't play their game and do the "free" sign-up. It doesn't really matter because very soon the agent advertising revenue will become inconsequential to these sites.

Now that they have the traffic, there appears to be a much more lucrative business model looming. It will be a simple shift to offer listings directly to home sellers who aren't listed with a local real estate broker. I can see the local MLS quickly becoming irrelevant if all listings (including non-MLS-listed properties) can be found on another easier to use website. Why would a home seller pay a real estate broker thousands to market and sell their home if they can get adequate exposure and an acceptable selling price elsewhere for a few hundred bucks or even "free"? We are currently in the transition. At the moment, as a seller, I couldn't be sure I'd be getting exposure to all buyers by only being offered on a non-MLS website. I might leave money on the table without exposure to all potential buyers. Certainly most buyers are looking for property online, but no one can be sure which website they are searching ... yet. That is changing and the eventual 800 pound gorilla may just be an under-the-radar chimp charging in from left field.

A couple of years ago Nationstar Mortgage began running some of it's short sales through auction.com prior to negotiating the short sale. After receiving a short sale package from a seller's agent, they would require the owner of the property to turn over the listing to auction.com or their short sale would be refused. If a bid above the short sale contract price was received at auction Nationstar would accept that one instead of the original contract. The buyer would pay a 5% premium on top of the winning bid and would be allowed no financing nor inspection contingencies. This turned out to be a lucrative venture for Nationstar and they recently acquired Homesearch.com for $18 million and began running their short sales through auction there. Their sights are on much loftier goals than short sale auctions and they may eclipse the Zillows and Trulias of the world and transform real estate in the process.

About the acquisition, Nationstar CEO Jay Bray said,

“Today, real estate search engines allow you to search for homes, find the estimated property value of your home, and somewhat realistically, those of your neighbors. However, these search engines are not currently designed to allow consumers to transact, and lack a comprehensive fee-based business model. In short, their value is generally limited to real estate catalogs supported by advertising.”

By contrast, Nationstar envisions that consumers and real estate agents who come to its site will be able to list their properties, manage them, sell them, buy them, and look for “downstream” mortgage, title, appraisal and closing services. Annually, there are 8 million real estate transactions in the United States, 5 million home transactions and 3 million refinancings. Our macro goal is to capture a fee component of as many U.S. real estate transactions as possible while increasing profitability,” Bray said.


Once they iron out the wrinkles using their own substantial inventory of short sales, I can see them offering the auction process to the public for a small fee. Probable scenario is: The property sellers specify a reserve price so they don't sell for less than the price they want but specify a starting bid substantially below the reserve. The buyer pays the website a 5% premium and hires a local agent to view properties, handle inspections, review paperwork, etc. He could choose that agent from a list of agents on the site. Since those 492 Cocoa Beach agents no longer have listings Homesearch would let them advertise bids for various services and busy work while scraping a small fee off the top. A couple hundred bucks to unlock a property and review a contract is better than nothing. In addition, the website would sell advertising or paid referrals to title companies, lenders and inspectors. One stop shopping and the blazer-clad Glamour Shots are free to join their travel agent brethren over a frosty brew at the Beach Shack discussing how video killed the radio star.

This is not crazy speculation. It's happening right now and the MLS systems are scrambling trying to put the horse (the listings) back in the barn. Our own association is among those embroiled in a fierce debate over the subject. I fear it may be too late. One bright spot is that when the traditional real estate model succumbs I will find myself in the best little beach town in Florida concerned more with wind and tide than inept listing agents and first right of refusal. There are worse things.

I hope everyone got a piece of the small longboard perfection yesterday morning. It was a classic summer Cocoa Beach day.

"If you do not change direction, you may end up where you're heading."  ___Lao Tzu

Friday, June 06, 2014

Ten Years After

2004, the national pastime and number one topic of discussion was the red-hot real estate market. Average Americans were buying investment properties worth ten times their annual income with no money down and no intention of renting them. The average Cocoa Beach residential property was appreciating by several hundred dollars a day. One's net worth was giddily recalculated every morning over coffee to figure out how much the night's sleep had netted. We still had another year and a half before reality crashed the party. Some escaped with easy riches and others were ruined.

In the bubbly month of May 2004, there were 71 MLS-listed condos and townhomes closed in Cocoa Beach and Cape Canaveral. I can't remember any deals that year falling apart over a declined mortgage or a low appraisal. That has certainly changed in the ten years since. Lender scrutiny of borrowers and of the property being purchased has never been more stringent. Despite the difficulty in the mortgage process, we have reclaimed the mountain. 71 condos and townhomes closed in our two cities in May 2014, as reported so far. We have come full circle. Single family home sales mirror the condo numbers.

There were 13 single family homes closed in May 2014 with eight of those over $400,000. Ten were purchased with a mortgage. There were no short sales or bank-owned homes sold. Someone picked up a fixer-upper 3/2 on a canal for $265,000.

Of the 71 closed condos, three sold for over $700,000. Cash accounted for 45 of the sales. There was but one short sale and 13 bank-owned units closed. Prices for decent direct ocean units above the ground floor clustered mainly in the low to mid $200s per square foot. A couple of very nice units brought around $300 per square foot and a couple needing work sold for less than $200 per.

There are 274 units for sale in the two cities this morning as reported by the Cocoa Beach MLS. Fifteen of those are not yet built. 7% of the total are distressed, nine bank-owned and ten short sales.

Summer is fully upon us with temps in the 90s most days tempered by the dependable sea breeze. The surf temperature is steady at 80 degrees. Fresh turtle nests are on the beach in the mornings and there have been plenty of days with decent waves so far. Offshore fishermen are catching good numbers and sizes of dolphin and a few guys have caught decent grouper and large mangrove snappers. The tripletail continue to bite for those who have the patience and know where to look. All combined, it's the usual "life is good" stuff, heavy on the salt water. I have a few summer weeks still open in ocean condos at prices from $785 total for seven nights for anyone wanting a piece of summer fun. Come on down. There's enough for everyone.



"There are no more committed people on the planet than surfers. We fall down a lot. We turn around, paddle back out, and do it over and over again. Unlike anything else in life, the stoke of surfing is so high that the failures quickly fade from memory."  ____Gary Sirota

Monday, June 02, 2014

Evil Condo Fees [updated]

Thanks to Jon for suggesting a post about condo fees. Contrary to popular opinion, condo fees are not a bad thing. They are not even unfair. Regularly collected fees from multiple owners of common property insure that adequate funds for common expenses are available when needed.

How much is fair? That depends on what those fees are intended to cover. At the same selling price, is condo unit A with $350 a month fees a better deal than than an identical unit, B, with $450 a month fees? Depends entirely on what those fees cover.

In most condos the monthly fees cover insurance for the buildings (usually the biggest single item), maintenance, water and sewer, basic cable, grounds care, trash pickup, common area electric, salaries for employees (if any) and other common expenses. There may also be money going into reserves for future expenses. More on that later. Some condo fees also cover hot water and WiFi and some even cover AC units. At the other end of the scale, some associations do a special assessment every year when the insurance bill arrives and a few complexes with artificially low monthlies seem to assess every time the Marlins lose a game.

So, back to the question; is the unit with low monthly fees better than the one with higher fees? Probably not if the lower fee unit is not funding reserves. If the unit with $450 fees is contributing 20% of the annual budget towards reserves ($90 per month per unit) then the units appear to be close to equal value at the same selling price. That is until the roof needs replacing or the building waterproofed and painted. In the building without reserves, the owners get a special assessment to pay their share of those items which can run into seven figures on some buildings. The buyer of the unit with the higher fees and a roof needing replacement next year has his share of the cost safely socked away in the reserve account (thanks to the previous owner's share of reserves) while the buyer of the lower fee unit may find himself writing a five figure check for his share of the replacement. 

There is another danger to the seemingly attractive low-fee unit. It may not be mortgage worthy. Unless a buyer is paying cash or making a substantial down payment, lenders may not loan on any unit in the complex. At the very least, most lender reviews of a condo are going to want to see 10% of the annual budget going into reserves and an amount equal to to the insurance deductible in the bank. It is normal for some owners to want to keep monthly fees as low as possible. Why fund reserves or keep unused money in the account if it means higher monthly fees? What they may not realize is that lower condo fees with no reserves means that the future sale of their and their neighbor's units will be more difficult. Funding the reserves at a rate of less than 10% of the total budget or not keeping the amount of the hurricane deductible in the bank might keep monthly fees low but it might also push your unit into the cash-buyers-only category.

[update] Another important factor to consider when reviewing condo reserve accounts. The amount of money in the reserve accounts is not a good measure by which to compare associations. For instance; If the amount of reserves designated for replacement roofs is $500,000 then the reserve account should contain $500,000 the month before the new roofs were paid for. However, the month after those roofs were paid for that reserve account would be depleted. A quick glance at a tiny reserve balance might lead an uninformed buyer to assume that the association was not adequately funding reserves. Don't assume, ask.

One last thought on the whole condo fee thing: Single family homes have the same expenses. They are just funded differently. The monthly costs for insurance, water/sewer, pest control, lawn and pool care for a Cocoa Beach home can easily run more than our example condo fees. Then there is the cost of the roof, painting, driveway, etc. when it's time to address those. It's a rare homeowner who has a designated reserve account. As they say, there is no free ride.

"Some people call me obsessive or driven or lucky or whatever. I'm all of those things. Shouldn't we all be?"  ___Kelly Slater

Tuesday, May 27, 2014

How to Handle Multiple Offers

 This is an excerpt from a post last year. It is still relevant enough that it bears repeating. With the continuing dearth of inventory, multiple offers are commonplace and buyers need to expect that possibility and respond in the manner that is most effective for their situation. Best to leave emotion and distrust at the door.

 
[from July 2013]
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Let's revisit multiple offers. I had an interesting encounter with a buyer last week who thought multiple offers should include multiple chances to do "best and highest". It doesn't work that way. Typically in our market, if more than one offer is received at the same time, the listing agent will go back to all buyers' agents and give them the opportunity to bring their best and highest offer to be presented to the seller at the same time. This is risky for the seller as the pervasive distrust of real estate agents means that they run the risk of losing one or all of the buyers. I was involved in one situation where both buyers withdrew their offer when asked to bring their best and highest. The condo ultimately sold to an entirely different person for less than at least one of the first buyers was willing to pay. If your buyer's agent tells you that the listing agent has called for "best and highest" because there are multiple offers, you have three choices.
  1. keep your offer exactly the same in hopes of being the winning offer
  2. increase your price and/or better your terms in hopes of being the winning offer
  3. withdraw your offer because you "don't play games' or believe the agent/s are lying to you
The seller also has choices of how they want to handle the multiple offers once received.

  1. They can accept the offer they like best and proceed to closing. Note that the best offer may not necessarily be the highest. Closing date and terms may win out over price.
  2. They can choose not to respond to any of the offers if none are good enough.
  3. They can counter one or several of the offers. If none of the prices are acceptable to them they can offer the same counter-price to all and accept the first one (if any) to respond. Or, if one is clearly better than the others, they may choose to counter that one alone with a change of price and/or terms.
How a buyer responds when asked for his best and highest offer is entirely his decision. How a seller responds to the offers she receives is entirely her decision. The buyer I mentioned who was upset with the process was bothered that he didn't get a second chance to better his "best and highest" when someone else made a more attractive offer. The seller chose to negotiate with the offer that she preferred. That offer was apparently good enough that she saw no upside to re-approaching the lesser offer. It was her decision to make. Also note that in the event of multiple offers, a seller doesn't have to call for best and highest. She has the right to choose the offer she likes best without giving anyone a chance to do best and highest.
At this stage of our market, multiple offers are the name of the game for any priced-right listing so be prepared for this if you're offering and don't let it deter you from participation. You decide what price and terms you're comfortable with and then hope for the best. You might win just by staying in the game without changing the offer at all. If you don't trust your agent enough to be honest with him, find another one.

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By the way, the most common reply that I get when I inform a buyer of multiple offers is "Do you think they are just playing games with us?" There seems to be a widely held belief that listing agents routinely use phantom offers to milk more money out of a buyer. In my experience this is just a myth. If a seller wants more money, they have just as good a chance of getting it by negotiating in the normal manner. Lies and phantom offers are not necessary and a straightforward counter-offer doesn't run the chance of chasing away a perfectly good but skittish buyer.

However beautiful the strategy, you should occasionally look at the results. Winston Churchill