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

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

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

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