Friday, December 23, 2016

I WIll Not Give It Away

"I will not give it away." is Parseltongue for "not really for sale" and is a phrase I hear far too often. It ranks right up there with "I won't play games." in popular self-defeating language I encounter in the often emotional business of buying and selling real estate. The "not really for sale" MLS listing (NRFS) is alive and well in our market. I've written about these properties in the past, in detail here. One of the types, the impossible-to-close short sale, no longer exists in our market, thankfully, but, all of the others remain with the way-overpriced, "I will not give it away" seller type flourishing.

We've averaged 55 condo and townhouse sales each month for the last six months in Cocoa Beach and Cape Canaveral. Half of those properties were on the market less than 50 days and 41% sold in a month or less. That's an indication of strong demand and accurate pricing. At the other end of the scale, ten of the sold units had been on the market for over a year before selling. Every one of those had multiple price drops before they got into a range that was finally acceptable to the market.

In contrast, half of the current condo and townhouse listings have been on the market for more than 90 days. The inference is obvious, they are over-priced. We currently have 229 condos and townhomes for sale on the Cocoa Beach MLS in our two cities. A third have languished for over half a year and an obstinate 8% have held their gilded units out for sale for over a year. The poster child of this NRFS parallel universe has been listed for almost two and a half years with a 20% price increase along the way. Zillow will allow anyone interested to play this game at home with their "Make Me Move" listings. Slap a crazy high price on your house and wait for the mythical buyer willing to pay your fantasy number. It's fun but has not proven to be a successful strategy. These stats tell us that the majority of the current MLS listings are owned by sellers with unrealistic expectations. History tells us that most will modify those expectations before selling. Some like the two years and counting listing will proudly cling to their incorrect opinion of their unit's value and never sell. Their listing agents will continue to sell other realistically priced properties to interested buyers who aren't willing to overpay for the listing that prompted their inquiry.

These over-priced listings typically have one of two types of listing agents. There is the agent who knows the price is unreasonable but encourages showings and offers with the hope that the seller will eventually see the light and accept or respond to a fair offer. In the meantime the NRFS listing may draw inquiries that lead to sales of other reasonably priced properties. Then we have the agent who for various reasons is committed to the fantasy price. She may be trying to boost or protect comps in the building, she may be related to or friends with the seller and can't speak the truth or she might not know the dirty details of the comps she's relying on to support the price. As a buyer's agent, it's frustrating to come up against these listings regardless the type of listing agent. I prefer the one who knows the property is overpriced but in the end, until the seller is willing to accept reality, some properties are just not for sale.

Of the 229 units for sale this morning, a large number are overpriced but haven't been listed long enough for our combined-days-on-market screen to identify them. I think it's safe to say that there are less than 100 condo and townhome units for sale in Cocoa Beach and Cape Canaveral that are asking within 10% of fair market value. Within that group are always a few recently listed gems. One of my clients was able to score what may turn out to be the smoking deal of the year in a luxury direct ocean condo in south Cocoa Beach. They were only able to do this because they had done their homework, knew what prices were fair for the type of unit they wanted, able to recognize a deal when it appeared and probably the most important part, able and willing to act immediately.

Those who are looking shouldn't despair over low inventory and unreasonable sellers. The search may take longer than planned but there are and will be reasonable sellers of the target property type. Buyers who know the range of fair value for their target property type and who are ready to act when something appears are the ones who will be successful in their search. If you need a well-trained bird dog with his nose in the ocean breeze, contact me. I know this patch of sand, the birds and the other dogs and they know me.

“It is difficult to get a man to understand something when his salary depends on his not understanding it.”   __Upton Sinclair

Sunday, December 11, 2016

Deception Becomes Reality

Outside the city limits looking south over unincorporated south Cocoa Beach towards Patrick Air Force Base where the land widens in the distance, Banana River on the right, Atlantic Ocean on the left. Now you know.

Following up on my recent post, When There Are No Comps, I'd like to explore the trustworthiness of comps a little more. An oceanfront condo sold recently in south Cocoa Beach for what seemed an unbelievably low price. It was a private sale and not on the MLS. I saw the contract. Written in the contract was a line that the purchaser would get use of the unit for the months of January, February and March free of cost for life. Sounds crazy since by buying the unit the purchaser gets exclusive use of the unit anyway. It was a tactic to defeat the first right of refusal process in this particular condo complex. It was intended to make the contract unattractive to any owners that wanted to exercise their right which would have been sure to happen since the price was so low. I feel fairly certain that the sales price on this contract did not accurately reflect the actual amount of money that changed hands. By writing the odd clause in the contract, the seller defeated the first right process  AND, if the contract price was indeed lower than the actual money changing hands, reduced his capital gains tax liability and the purchaser's  property taxes going forward. A win for both parties to the fraud but not for other taxpayers and other owners in the complex whose units now appear to be worth less than they really are.

I am aware of another unit in Cocoa Beach, also a private sale not on the MLS, that is due to close shortly that will likely record for an amount less than the actual selling price. Any Realtors or appraisers using it or the previous sale for comps will be using flawed information and will not get an accurate estimate of whatever property they're trying to value.

This works in the other direction as well. Developers are fond of propping up the comps in a new development by issuing credits to buyers at closing. I've seen "decorating credits" of up to $75,000 issued to a buyer of a new condo unit. That sale may have recorded at $600,000 but with the cash back to the buyer at closing the actual price was $525,000. A seller a year down the road may reasonably think his unit is worth $600,000 plus some appreciation. As long as the new buyer isn't aware of the unrecorded credit or the giant bonus [bribe] paid to the first buyer's agent he may willingly pay $600,000+.

This brings up an interesting point. If sales after the developer's departure reflect the inflated recorded comps as true then the initial deception becomes reality. This is actually the case at one very popular luxury complex in Cocoa Beach. There is another luxury complex in Cocoa Beach where a good number of the post-completion sales were by the developer and entities that he controlled. Several of the recorded sales involved property swaps and other off contract compensation that make selling prices seem far higher than they actually were. Private sellers in this building can't figure out why they aren't able to get any action at their asking prices which seem in line when compared to the bogus recorded prices.

Comps are only as good as the veracity and completeness of the information contained in them. Agents rarely make notes on closed sales that the entire contents were included in the final price or that commission was reduced or that the owner is getting the month of March free for the next five years. All those things affect the actual price paid. In the end it is prudent for all parties to a transaction to realize that comps are just part of the story and that there are often details that will never be known. CMAs and appraisals are only one person's opinion of value and that opinion is often formed with incomplete and/or inaccurate data. Proceed accordingly and don't lose a deal because of an opinion of value that might be flawed.

"False opinions are like counterfeit money, printed first by guilty men and thereafter circulated by honest people who perpetuate the crime without knowing what they are doing." ___paraphrased from a quote by Joseph de Maistre

Friday, December 02, 2016

Entering the Home Stretch

As of this morning the Cocoa Beach MLS is showing 52 condos and townhomes sold in Cocoa Beach and Cape Canaveral in the month of November. Just over half were purchased for cash and almost a third were on the market for less than two weeks. The inventory is hovering just above 200 existing units and sales for the year look to come up just shy of last year's record 710 sold units.



At the high end of the range were four oceanfront units at prices between $465,000 and $610,000. Lowest price paid for a unit in an oceanfront building was $170,000 for a ground floor Driftwood Villas 2/2 with 1236 square feet.

Four riverfront 2/2 units with garages in Cocoa Beach closed at prices between $230,000 and $255,500 at Commodore, Beachwalk, Sunset Harbor and Diamond Bay. One lucky buyer scored the most desirable unit at Harbor Isles in Cocoa Beach. The totally remodeled top floor southwest corner 3/2 in the south riverfront building closed for $380,000. The view over the islands from this unit is unequaled in Harbor Isles.

Other river units included a 4th floor Magnolia Bay 3/3 for $435,000, a 3rd floor corner 3/2 at Harbor Club behind the Sunset Grille that went for $395,000 and a 2nd floor corner 3/2 River Bend in south Cocoa Beach that brought $389,900. A 2nd floor south corner 3/2 in the south building at Solana on the River in Cape Canaveral sold for $372,000.

There were two weekly rental oceanfront units sold in November. One was a 2nd floor poolside unit at Cocoa Beach Club that sold for $250,000 and came with a seven year special assessment. Ouch. A 2nd floor direct ocean Boardwalk 2/2 in downtown Cocoa Beach closed for $312,825 with a garage.

A 4th floor direct ocean Stonewood 3/2 in mainly original condition with 1588 square feet sold for $360,000 while a totally remodeled 8th floor 2/2 Sand Dollar floor plan with 1470 square feet closed for $465,000. A rare 7th floor NE corner 3/2 in the "A" building at Royale Towers sold for $500,000 fully furnished. Amazing unobstructed panoramic ocean views from this unit with a wrap balcony. A gorgeous 6th floor totally and beautifully remodeled 3/2 unit at Constellation sold for $585,000 the first day on the market. These upper floor units at Constellation have, in addition to direct ocean views, wide open views from their west balconies across the three mile wide Banana River to south Merritt Island in the distance. Highest price paid in the month was $610,000 for a direct ocean 4th floor SE corner 3/2 Cape Club in Cape Canaveral.

Eleven single family homes and one half-duplex also closed in the month. Lowest price paid for a waterfront single family was $329,900 for a small 3/2 on a canal off Minutemen Cswy. Highest recorded price was $765,000 for a gorgeous totally remodeled 3296 square foot Key West style 5 bedroom, 3 bath on a canal with island views, 2 car garage and pool. Five of the total were purchased with cash and half were on the market less than a week and a half.

The Cocoa Beach Art Show was excellent again this year with a great lineup of musical artists on the big stage at the west end of the show on Minutemen and a ton of great art on display. The spirit of our small town is really captured in these street events with the Thanksgiving show being the best example. A very big thanks is in order for Steve Romano and all the other volunteers who pulled this annual event together after the desertion of the Space Coast Art Festival in 2014. Ironically, that event found themselves without a venue this year while the adolescent Cocoa Beach Art Show carried on in fine form as if it had always been there. Well done, guys.

"It's a black fly in your Chardonnay." __Alanis Morissette

Monday, November 28, 2016

Radio Romance in Cocoa Beach

The Nashville boys killed it once again with an electric set on the big stage at the Cocoa Beach Art Show Friday night and followed up with an acoustic evening at Juice and Java Saturday night.

Sunday, November 20, 2016

Red Light - Green Light

Can someone at the City explain to me why the Holiday Lane traffic light at A1A has a way shorter cycle than the much busier Cocoa Isles light? A1A traffic is repeatedly interrupted night and day for phantom traffic on Holiday. What's up with the light at Minutemen Causeway and Atlantic continuing it's cycle even while Minutemen is closed to traffic on either side? And, why do all of these lights stay on the same cycle through the night when there is minimal traffic entering A1A? Inquiring minds want to know.

A real estate contract is considered executed when all parties have finished signing. After that, the next step is to send the file to the closing agent which in Florida is usually a title company or, sometimes, an attorney's office that is also a title company. The title company then does the title search, co-ordinates with the buyer's lender if a mortgage is involved, determines tax liabilities and gets an estoppel letter from the association if the property is a condo. They then pull all this together and generate a settlement statement with exact numbers in enough time for the buyers to wire their funds for arrival by day of closing and then have all parties sign their respective documents (couriered or emailed to parties who will not be attending actual closing), disburse funds after closing and record the relevant documents. It's a complicated and under-appreciated job. The majority of closers I work with are legit rock stars at the process. I often think of them when I'm in one of those closings that have run past an hour and the closer is slowly reading every document before sliding it over for signatures. I see it like paper route math. As a paper boy if I've got 100 papers to deliver and can throw four a minute from my speeding bike, I can do my route in 25 minutes. Slow my pace down by just 21 seconds per paper or stop for  a couple of short discussions with customers and that same route takes an hour. A closer who can only do one signature page per minute is going to take at least an hour to do a 60 page closing. There are stars who can do a sixty page closing in 15 minutes. You know who you are and I appreciate you more than I can express.

Title insurance rates tend to be very close among the different companies and government charges are identical but the settlement and other fees paid to the title company can vary by several hundred dollars. In my experience, the slower and less efficient the title company, the higher these additional fees. Makes sense. A closer who can only close two or three deals a day needs to charge more to make up for inefficiency.

In Florida the seller typically selects the title company since they are the ones paying (usually) for the buyer's owner's policy. If the seller doesn't have a preference, their listing agent will suggest a title company that's, hopefully, conveniently located and good at what they do. Sometimes they are neither. I wish it were different because the difference in closing agent can be the difference in whether a transaction closes on time or actually closes at all. Since the buyer has very little influence in the selection I would encourage listing agents to recommend title companies that are good at what they do and to please use one somewhat close to the property and/or principals. It is a disservice to the seller and buyer of a Cocoa Beach condo when the listing agent selects a title company in Palm Bay because it's convenient to her office. Likewise for continuing to use a company that wastes everyone's time with closings that last way too long. I'm thinking specifically about a closing last month attended by nine people that took an hour and a half for no good reason. There were times when I expected someone to poke the closer to see if she was still awake.


As expected, mortgage rates rose sharply this past week as the bond market sold off. Freddie Mac's Thursday mortgage rate survey showed the nationwide average rate for a 30 year fixed rate mortgage at 3.94%,  half a percentage point higher than in early October and a .37% rise in one week. We began 2016 with rates at 3.97%.

Cocoa Beach Art Show this coming weekend. The live music lineup is stellar this year. Things kick off Black Friday at 5:30 with Nashville's Radio Romance on the big stage. We get to see these boys a few times a year at Juice and Java and it'll be a treat to see them on the big stage again. There's a good chance we'll be looking back one day saying "I remember seeing those guys before they hit the big time."


"Me, I won't be wearin' nothin' that I can't get wet."  ___Eli Young Band

Monday, November 14, 2016

A Couple of Shades of Grey

With my older and more frequently faulty memory I feel the need to write things down lest they become lost. Allow me to ramble about whatever is passing between my ears this beautiful November morning in Cocoa Beach. Last Saturday morning's sunrise from 1st St. South above.

Directions to a Cape Canaveral condo listing; east on 528, exit Terminal B Cruise, bear left on George King Blvd., right on North Atlantic and ... Apparently this listing agent from Merritt Island is expecting all showings to be coming from non-beachside agents along the Beachline corridor inland. Any beachside agent not familiar with the complex will have to rely on Google maps or their GPS to find and show it.

I called a listing agent last Thursday for showing instructions to her Cocoa Beach listing. No answer so I left a voice message and followed up with an email and then called her office. Voicemail answered with "If you are a seller dial 101", "If you are a buyer dial 102", "If you are a renter dial 103",  "If you'd like to speak to John Adams dial 104",  "If you'd like to speak to Barbara Anderson dial 105" and on and on. [names changed] I waded through about ten agents' names before conceding defeat and hanging up. This type of voice mail is not uncommon among area brokerages. It is an unnecessary barrier between a property for sale and those trying to show it. Buyer's agents juggling multiple appointments may have to exclude listings with this much friction to showing. The listing agent did respond to my email about six hours later saying if we could wait until Tuesday, we could see it. We couldn't. It's been on the market for 78 days and has one MLS photo. It's of the outside of the building. The listing description is 21 words long. Her office is in another city. I hope the seller is getting a substantial listing discount for this sub-par performance.

Longtime readers can skip this next paragraph. It's been repeated ad nauseam apparently to no avail. I continue to have listing agents request that the escrow deposit be held at the seller's title company. I understand why your broker doesn't maintain an escrow account. It's a royal pain and comes with a lot of liability and oversight. Life is much easier when that responsibility is handed off to the title companies. Guess what? The only person to benefit from that policy is the broker. It's in both the buyer's and seller's best interest that the escrow deposit be held in a real estate broker's escrow account and NEVER the title company's. Stop endangering your clients with this unnecessary risk. You should be happy that my company maintains an escrow account and is willing to do everyone a favor by holding the buyer's deposit there. Go back to real estate school if you don't understand why.

How about the practice of withdrawing and relisting a property to reset the "Days on Market" clock? Legal? Yes. Ethical? Maybe. Knowingly deceptive? Absolutely. It actually does get a stale listing back on everyone's hotsheet and on auto-emails from the MLS so it can be an effective tactic. It's sort of like telling a little lie for the greater good. Shades of grey.

There are 21 "waterfront" condos for sale today in Cocoa Beach and Cape Canaveral. A person is able to actually see the water from eight of them. Four of them are over a half mile from the water. A darker shade of grey.

Just how tight is the inventory? There are 211 existing condos and townhomes for sale in Cocoa Beach and Cape Canaveral today. More than that have closed since July 15 this year. There are 42 single family homes for sale, the same number that have closed since August 1.

The rate on 30 year US Treasury bonds Monday morning one week ago was 2.60%. One week and a presidential election since and the rate this morning looks to open at 3.04%. Freddie Mac publishes it's weekly mortgage rate survey on Thursdays so most of us won't see the actual impact on mortgage rates until next Thursday. It's probably safe to expect a decent bump upwards. Before anyone panics, for perspective, it is right where it was exactly one year ago.

It was 68 degrees and dead calm this morning at sunrise as the super moon slipped over the western shore of the Banana River. The high today, November 14, in Cocoa Beach is forecast to be 78 with a light NW breeze. The surf is tiny but there is one optimistic guy out at the Pier right now (pictured above). The water temp in the mid-70s is higher than the air temp.

The Cocoa Beach Art Festival is less than two weeks away. Get the dogs groomed and the kids washed. It will be a good time as always. I hope to see many of you there.

“The last refuge of the insomniac is a sense of superiority to the sleeping world.” __________Leonard Cohen, may he rest in peace.

Thursday, November 10, 2016

Condos, Traffic, Turtles, Betrayal and Art

Thanks to Jim F. for the south Cocoa Beach sunrise photo
Somehow in a landscape of sparse resources my tribe has been able to find sustenance. Diligence has paid off and we have been able to pick off several excellent beach properties in the last month. Inventory of condos and townhomes in Cocoa Beach and Cape Canaveral has been in a ridiculously low and shrinking trend for the entirety of 2016. We have not seen over 300 total units for sale since January of 2014 and by fall this year we were threatening to slip below 200 total existing units for sale. Overlay a few criteria on that number and the decent possibilities for some prospective buyers can quickly hit single digits.

Looking for a direct ocean unit in Cocoa Beach or Cape Canaveral? The MLS reveals 38 total existing units for sale at the moment. Budget of less than $500,000? Eliminate 20 of the total. Must have at least three bedrooms? Now we're looking at six possible units, two of them ground floor. How about the buyer looking for direct ocean with at least two bedrooms and two baths with a budget of $300,000? The MLS comes up with three hits but one is not actually east facing (listing agent dishonestly listed as "direct"), another is ground floor and the last is "direct" if you consider a distant horizon view over the pool "direct". Speaking of listing agent dishonesty, entering south or north facing units as "direct" is, I suppose, an attempt to get more showings with the thought that a buyer will decide that a south view is good enough in spite of having been deceived. Marketing and honesty are often at odds.

Those of you with similar criteria need to remember this when you find that awesome new listing  of a "direct" 2/2 for $250,000. I can tell you without looking that the listing agent exercised some level of poetic license when entering her $250K "direct" listing in the MLS. Ever wonder why so many listing agents' assistants are so muscular? It's so they can hang onto the boss while she's hanging off the south facing balcony with a telephoto lens craning left to get her shot of the "direct" view for the listing. It's not so difficult for those agents who describe the west building at Conquistador as direct. They only have to zoom over Ocean Beach Boulevard below separating the building from the beach to get a clean "direct" view shot of the distant ocean. Direct indeed.

In the month of October 41 condos and townhomes closed in our two cities. During the same time 14 single family homes closed. Highest price for a home was $399,000 for a beautiful two year old 3 bedroom 2.5 bath with 2219 square feet on Seminole Lane. Lowest price paid was $179,900 for a bank-owned 3/2 handyman special on Java Rd. It needed everything.

Closed condos included two more at the just-completed Cocoa Cabanas oceanfront in south Cocoa Beach. They went for $925,000 and $865,000. Both were 3/3.5 corner units with 2580 square feet and two garage spots. Prime oceanfront units with unobstructed views that are either new or totally and nicely remodeled continue to bring $300 a foot and higher. Despite the hurdles associated with condo loans half of the condo buyers in October used a mortgage to finance their purchase. A third of the closed units were listed for ten days or less, another persistent trend directly related to the super low inventory.

The strong onshore winds since the hurricane have been devastating for late season hatchling turtles. The wall of whitewater is virtually impossible for a freshly hatched turtle to punch through and hundreds of them have been found near death on the shoreline after swimming until exhaustion to try to get through the surf. Every surfer can identify with this. I can't imagine my first paddle-out being in quadruple overhead onshore slop. People finding these little guys have been dropping them off at Lori Wilson Park and other designated drop-off spots where they are collected and nursed back to health before being dropped off from a boat beyond the death zone for a second chance. Surfers in the southern end of town who've been jonesing for a good day were rewarded yesterday afternoon when the wind died down before sunset and the big, long period north swell cleaned up with smooth head-high plus lefts peeling down the beach.

In what can only be described as a cluster of royal proportions, the pain in the butt that is the Minutemen Causeway streetscape nightmare project with it's associated detours has been joined by the A1A resurfacing project topped off with the A1A sidewalk project further south. Traffic is worse than any Easter weekend in history and it's every day. The City has issued threats that they will be finished with the steetscape between Orlando and Brevard soon but they've fooled us before. Those who haven't heard might be surprised that the Space Coast Art Festival which turned it's back on Cocoa Beach for a tasty venue change at the Port finds itself without a venue this year and a whole bunch of pissed-off artists. It may never recover. On the bright side, the Cocoa Beach Art Festival which quickly filled the gap last year after the desertion of the SCAF will be continuing the tradition again this Thanksgiving weekend in downtown Cocoa Beach. Displays will be shifted around on Brevard Ave. to accommodate the afore mentioned streetscape nightmare. I look forward to seeing many of you there. Radio Romance will be hitting the big stage again this year.

"We must accept finite disappointment but never lose infinite hope."  __Martin Luther King, Jr.

Sunday, November 06, 2016

When There Are No Comps

How much is that condo or house worth? The easy answer is whatever someone is willing to pay but in the real world it's not usually so simple. It's a rare day that I'm not pouring over recent Cocoa Beach and Cape Canaveral property sales to try to come up with fair current value for an unsold property. For properties with very similar, recently closed comparable sales (comps) the process can be pretty straightforward with a high level of confidence in the conclusion. Much of the time there are no reasonably similar comps and I or an appraiser or a prospective seller or buyer are forced to adjust for differences in the most closely similar sold comps.

My usual starting point is square footage. I will scan recent (no more than six months old) sales with similar characteristics and then filter for the most similar. I try to keep square footage as close as possible to my subject property as dollars per square footage tend to trend with unit size, higher for smaller units and vice versa. If a 3rd floor direct ocean unit with 1200 square feet in mainly original 1985 condition sold last month for $250 per square foot then another 1300 square foot similar unit above the ground floor in a similar building should be worth close to the same $/sf. While both may be in original condition, one may have a new AC system or private garage rather than a designated space under the building and I'll have to SWAG a number for these differences to arrive at my number. If it's a garage versus an open spot it's easy to estimate value for the garage. Same for a new AC system or new floors or appliances.

And then there are those differences that are more difficult to quantify. Without recent comps how much more is a corner worth than an interior unit in the same building? How much more is a 4th floor unit worth over an identical 2nd floor unit? What is the difference in value of corner units in a building with a close building on one side and open space on the other? When faced with these qualities without recent comps then we are back to the easy answer; whatever someone will pay. When a reasonable, informed seller who wants to sell meets a reasonable, informed (and capable) buyer who wants to buy that property, a deal will happen. Many fair deals don't happen because one or both parties weren't reasonable or informed. or just had a difference of opinion on value. When faced with a specific quality or shortcoming that is missing in the comps the parties are forced to refocus on the big picture and make a judgement call on the unknown quantity. The guy who "never pays asking price for anything" may miss out on a steal and the guy who "won't accept anything less than what I paid" may lose even more money waiting for a buyer who'll pay his number.

If I'm selling and a prospective buyer thinks my corner view is worth $10,000 less than I do I have three choices if I want to sell; stand firm with my opinion of value, yield to his opinion or try to negotiate a middle ground. The buyer has the same three choices and the advantage of being in a rising market. No one wants to overpay for a property but, with tight inventory, knowingly overpaying a percentage point or two stands a good chance of being the more prudent choice, especially for rare or unique properties.

Our takeaway: Property value, no matter who is assigning it, is only an opinion of value. Small differences in that opinion should not stand in the way of a sale happening between two parties who want to do a deal. If the goal is a transaction, flexibility in one's opinion is a powerful tool.

It was great seeing so many Cocoa Beach folks last night at the grand opening of The Studios of Cocoa Beach. The turnout was overwhelming and the collection of art on display was beautiful. If you missed it I encourage a visit to see the brightest new addition to the downtown scene. Open daily. As I walked to my car at some point during the night I could hear live music drifting out of doorways from at least six different places in a one block area with an overlay sound of the surf in the background. Our downtown may be small but it is diverse and concentrated and I love it.

"We meet aliens every day who have something to give us. They come in the form of people with different opinions."  __William Shatner

Sunday, October 30, 2016

Happenings Downtown Cocoa Beach

It's good to see new things happening in downtown Cocoa Beach ahead of the completion of the Minutemen Causeway streetscape project. It's been a long haul so far but I believe the end result will have been worth the inconvenience of the detours and closed roads. Speaking of, please support those businesses across from City Hall while their section of Minutemen is closed. They are all accessible from the alley (Wayne Coombs Way) by Roberto's Cuban Cafe connecting Orlando and Brevard Avenues.

New arrivals to downtown include The Thirsty Oyster raw bar on the corner of Atlantic and Minutemen in the old shell shop location. The Bula Kava Bar has opened on Orlando Ave. between North 1st and 2nd streets and, Grand Opening next weekend, the Studios of Cocoa Beach next door to Heidi's Jazz Club on Minutemen between Orlando and Atlantic Avenues.

The Studios are a co-operative, non-profit venture run by volunteers and the artists who display there. The idea was conceived by Peter Hain and Tony Sasso who enlisted a group of hard-working volunteers to join them to make the dream a reality. At present there are over 25 artists displaying a diverse mix of works in assorted mediums. The Studios are open to the public now with the big Grand Opening celebration next weekend, November 5. For those interested in displaying, teaching, volunteering or sponsoring please contact them through their website Studios of Cocoa Beach There will be an ongoing roster of classes and the art lineup will be ever-changing. Please stop by and support the arts in our community and visit the other new arrivals to the downtown scene while you're there.

“Art washes away from the soul the dust of everyday life.” __Pablo Picasso

Saturday, October 15, 2016

After the Storm

One week ago we were breathing a sigh of relief having just side-stepped Hurricane Matthew's rush northward. Our northern neighbors were not so lucky but for the most part Cocoa Beach and Cape Canaveral suffered minimal damage. The main impact here was widespread landscape damage, scattered roof damage primarily on older buildings, blown down signs, toppled fences and downed power lines. West facing shorelines on the open Banana River took a hard hit from the west winds on the back side of the storm with some severe dock damage in south Cocoa Beach. Some sections of Cocoa Beach were without power for as much as five days but most had power restored within the first couple of days post Matthew. In south Cocoa Beach most buildings never did lose power. Beach erosion was very minimal although we've had some impact from the hard onshores and high surf of the week following the storm. All in all, another blustery week at the beach. The plastic yardbirds above successfully rode out the storm hunkered down behind the Spanish bayonets and dune vegetation which didn't fare as well.

Real estate sales last month were strong coming one unit shy (65 closed units) of setting a record as the busiest September ever recorded in Cocoa Beach and Cape Canaveral for condo sales. Six oceanfront units commanded selling prices over $300 per square foot. All of those were either new or completed remodeled and several included furnishings at that price. The lowest price per square foot paid for a direct ocean unit above the ground floor was $247/sf for a 3rd floor mildly updated 1/1 Royale Towers with a garage. In a departure from the recent trend towards more buyers using mortgages, two thirds of the condo sales in September were cash deals.

Another trend I'm seeing is overpricing at initial listing. It makes sense for a seller who is in no hurry to take a chance at landing a lottery winner or frustrated buyer willing to pay more than fair current value. There are two sides to this. In a rising market a reasonable premium to current value will be overtaken with time. However, unless the unit is a unique floor plan or rarely offered type, a buyer can just wait for another acceptable unit at a better price. For a one-of-a-kind or hard to find floor plan, it may make sense to pay a reasonable premium. By the time another unit is offered, prices may have overtaken what the premium would have been. As always, homework pays off.

Knowing that this dynamic is in play makes it more prudent than ever for buyers to know exactly what property criteria matter to them AND how to approximate current value. Just hoping to get X% off asking price is not a good plan. When looking at comps be aware that the sales prices that are reported in the MLS and the Property Appraiser's site don't always include all sales details. Be especially doubtful of too-good-to-be-true prices of non-MLS sales prices at the PA's site. It is not uncommon for private parties to exchange a portion of the sales price off the record to reduce tax implications. One or two sales whether MLS or not do not reveal enough information to accurately value a comparable property unless one can be certain that all the details of the sales are known. For instance; the listing agent often doesn't indicate when closing a listing whether or not the furnishings were included in the sales price or that the seller was granted a free three month stay next snowbird season.

Our takeaway: putting an exact current market value on a property is not possible. We can only approximate. Knowing what I want in a property may be just as important as nailing down exact current value. If the perfect unit becomes available I need to be able to recognize that and make an informed decision about what I'm willing to pay to get that unit. At least some of those 65 people who closed in September went through this process successfully.

Good hunting out there. Those looking for a condo or townhome in our two cites have 207 existing units to choose from today. Less than half of those are in oceanfront buildings. Many are way overpriced. You'll increase your odds if you do your homework and find an agent you can trust who knows this market.

"Fear of the storm is usually worse than the storm itself."  ___Gail Lynne Goodwin

Sunday, October 02, 2016

Sue the Association for Water Damage?

Thanks to Jewelry by Pam for the cool photo
I woke up in the middle of the night to the sound of a huge crashing noise that sounded like it came from my bathroom. I grabbed the nearest weapon (a formidable broken post-hole digger handle) and tiptoed into the bathroom ready for imminent batting practice. I was relieved to find not an intruder but the entire ceiling above my bathtub resting peacefully and soggily in my tub in a pool of dirty water. Turns out the upstairs neighbor had forgotten to turn the water off when filling her tub and it had overflowed and leaked through the floor and walls onto my ceiling which eventually collapsed from the weight. It got way more interesting after the initial incident.

Who is responsible for damages in this sort of incident in a multi-story condo building; the offending unit owner, the damaged unit's owner or the association? I got lucky and my neighbor made the repairs to my unit at her expense without my even asking. Had she not, I would have had to make a claim on my unit insurance as the other owner's insurance does not cover my unit. Surprisingly, neither does the association's policy.  Unknown to me at the time, my insurance company would probably have paid me and then gone after my neighbor and her insurance company and possibly the association for recovery of the money they paid me.

A similar incident happened in a unit I manage when the washer failed and leaked into the downstairs kitchen causing damage. Like my upstairs neighbor I paid to have the electrical and sheetrock damage repaired. Unknown to me, that unit owner filed a claim with their insurance company for inflated damages and collected a check for far more than the actual damages including the items that I had already taken care of and paid for. Several months later, the owner of the unit I managed received notice of a suit for damages from him by the downstairs unit owner's insurance company.

I was reminded of this last week when a lender's search of court records for a condo purchase in Cocoa Beach turned up a lawsuit against the association by a unit owner's insurance company in a similar water leak incident from one unit into another. I understand that it makes sense in a lawsuit to name as many parties as possible to increase odds of eventually settling with someone. Being named in a lawsuit even where no liability exists can be more than just a hassle for a  condo association as we found out. An unsettled lawsuit against an association will stop the mortgage process faster than a Stop Stick in the path of a speeding 69 Camaro.

In our case, the underwriter refused to sign off on the file that was otherwise approved because of unknown liability to the association, Florida law be damned. Florida Statutes appear to actually prevent an association from insuring the interior of units. For your reading enjoyment as applies to the association's insurance coverage requirements from the Statute (below); Make your own interpretations and decisions.

718.113(2). 3. The coverage must exclude all personal property within the unit or limited common elements, and floor, wall, and ceiling coverings, electrical fixtures, appliances, water heaters, water filters, built-in cabinets and countertops, and window treatments, including curtains, drapes, blinds, hardware, and similar window treatment components, or replacements of any of the foregoing which are located within the boundaries of the unit and serve only such unit. Such property and any insurance thereupon is the responsibility of the unit owner.

Hopefully we will overcome the underwriter's objections and close. Takeaway: A specific person/entity's liability may matter less than the implications of a lawsuit initiated by an owner or her insurance carrier in the absence of an equitable settlement between involved unit owners. In my original experience, no insurance company was involved, remedy costs were minimal and no other owners were affected. In my second experience and in last week's incident, all unit owners were affected by the route taken by the affected owners. Sales involving a mortgage in a complex with an unsettled lawsuit against the association even if frivolously filed as in this case may be put on hold until the suit is settled and recorded.

It may not seem fair but if you're involved in a water leak incident in a condo building you may want to weigh the costs/benefits of settling without insurance company involvement against the unintended effects of an insurance company lawsuit's scattergun approach. The damages to you or one of your neighbors from a lost or delayed sale could be far more than the cost to repair the water damage.

"There are downsides to everything; there are unintended consequences to everything."  __________Steve Jobs
unintended consequences.
Read more at: http://www.brainyquote.com/quotes/keywords/unintended_consequences.html

Saturday, September 24, 2016

Calm Before the Storm... or Maybe Not

The boaters in the crowd will appreciate the photo above from last week in the Gulf Stream on a rare dead calm day. These were the conditions when I crossed over to the Bahamas from Florida. These same conditions lasted for six straight days. It's not often like this.

Summer officially ended this week but you couldn't tell from the air or water temperature in Cocoa Beach. We've had a small background swell for a few days from the distant tropical storms out in the Atlantic and everyone is chomping at the bit for the first big one to arrive.

Real estate sales in Cocoa Beach and Cape Canaveral have been brisk if somewhat slower post Labor Day despite the ever-dwindling inventory. As of this morning there are only 202 existing condos and townhomes for sale in Cocoa Beach and Cape Canaveral. For those looking for a unit with any sort of peek of the ocean the choices number less than 100. Refine that search to direct ocean above the ground floor asking less than a half million and the total number of units for sale in both cities is 14 between $347,000 and $498,000. According to the Cocoa Beach MLS we've closed 37 units so far this month, 78% of those for cash.

I think it's worth repeating the point I made in the Is Your Agent Gambling post about escrow deposits. This applies to both sellers and buyers. If your agent recommends holding the buyer's escrow deposit in a title company or attorney's escrow account, ask him why and what happens should there be a dispute in the event of a failed contract. He may not know or may just be doing what he's always done, having never been involved in a dispute. In Florida, unless it's a foreclosure sale and you have no other option, ALWAYS insist that the escrow deposit be held in a real estate broker's escrow account.

Which contract should a buyer use when offering, Florida's standard Residential Contract for Sale and Purchase or the As-Is contract? The standard contract specifies guidelines for property condition and what a seller must repair or replace within the monetary limits set forth in the contract. The As-Is contract sets no requirements for property condition and relieves the seller from obligation to repair items found in the inspection. The implication of this relief is often misunderstood.

Example: During inspection the AC compressor unit is found to be non-functional. With the standard contract, the seller is obligated (after being notified by buyer post inspection) to repair or replace it within the limits set forth in the contract. Under the As-Is contract the seller is not required to do anything BUT the buyer has the option of cancelling the contract at their "sole discretion" within the inspection period. What usually happens is that the buyer makes a demand for a new unit or a monetary concession. The seller can either agree to the demand, reject the demand or try to negotiate some middle ground. As long as the inspection period has not ended the buyer retains the right to walk away and receive refund of their escrow deposit. If they deliver a release and cancellation to the seller and the seller refuses to sign, they'll both be hiring lawyers if the escrow is at the title company.

Which contract is preferable? I tend to lean towards the As-Is for a buyer as it gives the buyer the power to ask for a monetary concession rather than giving the seller the power to repair or replace. In the AC example, a seller would always choose to replace with the cheapest available unit while the buyer might prefer to replace with a better, more efficient unit. Note that in an As-Is contract, a buyer shouldn't expect to go back to the seller after inspections and ask for concessions for readily observable conditions or items that the seller disclosed up front. A seller may have designated that the property be sold As-Is to relieve himslef of the obligation to replace some of the minor items listed below. This doesn't mean a buyer shouldn't ask for a concession for a major item found during inspections.

Here is the language from the standard contract which is a good guideline even for those using an As-Is contract. 
_______________________________

Property Condition: The following items shall be free of leaks, water damage or structural damage: ceiling, roof (including fascia and soffits), exterior and interior walls, doors, windows, and foundation. The above items together with pool, pool equipment, non-leased major appliances, heating, cooling, mechanical, electrical, security, sprinkler, septic and plumbing systems and machinery, seawalls, and dockage, are, and shall be maintained until Closing, in “Working Condition” (defined below). Torn screens (including pool and patio screens), fogged windows, and missing roof tiles or shingles shall be repaired or replaced by Seller prior to Closing.

Seller is not required to repair or replace “Cosmetic Conditions” (defined below), unless the Cosmetic Conditions resulted from a defect in an item Seller is obligated to repair or replace. “Working Condition” means operating in the manner in which the item was designed to operate. “Cosmetic Conditions” means aesthetic imperfections that do not affect Working Condition of the item, including, but not limited to: pitted marcite; tears, worn spots and discoloration of floor coverings, wallpapers, or window treatments; nail holes, scrapes, scratches, dents, chips or caulking in ceilings, walls, flooring, tile, fixtures, or mirrors; and minor cracks in walls, floor tiles, windows, driveways, sidewalks, pool decks, and garage and patio floors. Cracked roof tiles, curling or worn shingles, or limited roof life shall not be considered defects Seller must repair or replace, so long as there is no evidence of actual leaks, leakage or structural damage.
_______________________________

If you're looking for a property in Cocoa Beach or Cape Canaveral I'm happy to help you find it and to guide you through the process. I know this market like the back of my wrinkled hand and I understand the process and the implications of the choices I recommend for you.I enjoy helping people find their own spot in this town that I love. Call or email me.

Speaking of email and somewhat related; I was asked one day years ago "So what does Condor Anger mean?" I initially chose the Condo Ranger email address in a childish moment as a play on Walker Texas Ranger. Just never realized until asked that Condor Anger could be construed. After contemplation it sounds way cooler but I digress.

"If in doubt, paddle out." ___Nat Young

Monday, September 05, 2016

Having a Record Year

Thanks to JewelrybyPam.com for the photo
It's not just Eric Church who is having a Record Year. The month of August set another record for the Cocoa Beach real estate market. The number of sales exceeded the last eleven years of same month sales including August 2005. It's the only month this year to have exceeded the same month numbers for 2005.

It's apparent now that September 2005 was the beginning of the end of the party that raged through the real estate market but we didn't know that at the time. Inflated selling prices held on here for another two years before it became obvious that the party was over.

It's been a long haul and prices are still far below 2005 numbers but, even with our current severely low inventory (less than a quarter that of ten years ago), participation is high and properties are selling. Our inventory of properties for sale is at an all-time low. This morning there are only 222 existing condos and townhomes for sale in Cocoa Beach and Cape Canaveral. We have closed that many in the last 14 weeks. Looking for a direct ocean condo with at least two bedrooms above the ground floor for less than a half million dollars? You have ten available, two of which have compromised ocean views. The more specific the criteria the shorter the list becomes. Single family homes are in equally short supply with only 50 available. 

Interesting side-note: A search for a Cocoa Beach real estate agent on Zillow yields 250 results while a search for a Cocoa Beach condo turns up 140. Mention too loudly that you're looking for property at a restaurant or bar here and you'll become the last piece of fried chicken at a crowded table when the lights go out. 

We had a total of 72 condo and townhome units sold in Cocoa Beach and Cape Canaveral in 2016 compared to 64 in August 2005. Let's compare selling prices of a few properties in the peak years with the prices they closed for last month.

A 2/2 Portside Villas that sold in 2006 for $174,600 closed last month for $123,500.
A River Gardens 3 BR townhome sold in 2006 for $252,500 and last month for $225,000.
A Windjammer 2/2 sold in 2004 for $424,500 and again last month for $362,500.
A Solana River 3/2 sold for $427,500 in 2005 and last month for $375,000.
A Puerto del Rio that sold for $599,000 in 2004 sold for $433,000 in August.
A Windward Apts 2/1 sold for $190,000 in 2005 and last month for $94,000.
An Aqua Sea 1/1 that sold for $154,000 in 2005 closed for $96,800 in August.
A Banana Bay townhome that sold for $235,000 in 06 closed for $172,500 last month.

I'd like to give a thank you to the listing agent who responded immediately to my message on a Saturday night of a holiday weekend to help arrange a last-minute showing the next day. This goes a long way towards repairing the bad impression left by the many who take days to respond.

We woke up this Labor Day morning to a fresh long-period north swell from the remnants of Hurricane Hermine wandering around south of Nantucket. Waves are expected to build through the next several days. With such a northerly wave source surfers need to hit beaches south of downtown Cocoa Beach to get any size. At the moment the Pier looks to be about knee-high for the contest while south Cocoa Beach was already seeing shoulder-high sets this morning on the lower tide. Get out there if you can. It'll be a goofy-footer's delight with plentiful loooong lefts.

"Squalls out on the gulf stream..." __J. Buffett

Monday, August 22, 2016

Is Your Agent Gambling With Your Money?

Pop quiz (all questions refer to Florida real estate transactions):

1. From a seller's perspective is it better to have the buyer's escrow deposit held at the seller's title company?

2. From a buyer's perspective, is it OK for the deposit to be held at the seller's title company?

3. From an agent's perspective, is there a good reason for not holding the escrow deposit in a real estate broker's escrow account?

Answers: All three, a resounding NO

This quiz was prompted by another instance this past weekend of a seller's agent requesting that the buyer's escrow deposit be held at the seller's title company. This has become more frequent over the years as more and more brokers stopped maintaining escrow accounts because of the hassles of reconciliation and Draconian oversight. To understate, they are a big pain in the butt, but worth it for the clients' protection.

Our local Association of Realtors made a mistake last year in a revision of the MLS listing entry form and added a listing field for "Escrow Agent". It has always been customary in Florida for the seller to select the title company as they usually buy the owner's title policy for the buyer. What has not been customary is for the seller to select the holder for the buyer's escrow deposit. As soon as this field appeared, rookie and experienced agents alike began demanding that buyers hold escrow with the title company or attorney named in the "Escrow Agent" field. Some of them did this out of ignorance and lack of experience. Others wrongly assumed that it was required since it was a part of the listing.

Our MLS committee corrected the entry form two weeks ago to "Closing Company" to relieve the confusion but some agents are still dangerously requesting escrow deposits to be held by a title company. Why does it matter?

It only matter if the sale falls apart and there is a dispute over the deposit. Most title companies and attorneys will not disburse escrow deposits unless both parties have signed a release and cancellation. A buyer can cancel in good faith under the terms of the contract and be entitled to return of the deposit but if the seller refuses to sign a release and cancellation, the title company will probably not return the deposit to the buyer. From the Florida Association of Realtors :"Ask an Attorney" forum.

In most cases, a title company will require clear written instructions from both parties before releasing the deposit.  If the parties can’t provide matching instructions within a reasonable period, the title company will likely deposit the funds with the local clerk of courts, and either party may then file a court case to argue why they believe they’re entitled to the deposit.

Under the same circumstances, if the money is held in a Florida real estate broker's escrow account, there is a free dispute resolution process. The broker holding escrow may request an Escrow Disbursement Order (EDO) from the Florida Real Estate Commission (FREC). They will review the facts and issue an order for disbursement of the funds based on their findings. No cost to either party. Holding escrow in a broker's escrow account is not a casual recommendation on my part. I have been involved in escrow disputes and, in every case, thankfully, the dispute was resolved for free by FREC. Agents who have not been involved in a dispute are likely to have a more cavalier attitude towards it.

Our takeaway: Barring unusual circumstances, it is always safer for the seller, the buyer and the agents involved for a buyer's escrow deposit to be held in a Florida real estate broker's escrow account. Listing agents reading this, be happy that I am willing to hold the buyer's deposit in our escrow account. You and your client are more protected. Buyers and sellers reading this, if your agent recommends the title company hold escrow deposit ask one question; "Why?"

"I wanted to be a comedian."  __Kelly Slater

Saturday, August 13, 2016

Turtles, Mangoes, Snook and Zika

The bumper mango harvest is almost finished here for 2016. It's been a good one.

The little turtle pictured hatched early in the morning (not a good time) in south Cocoa Beach and was just making his way to the ocean as the sun was rising. There was a flock of crows picking off stragglers but with a little human scarecrow action this one made it safely to the ocean for his first day of life.

We entered August with an inventory of just under 250 total condos and townhomes for sale in Cocoa Beach and Cape Canaveral. That's the number of units that have closed since early April this year. The demand/supply imbalance continues to pressure prices higher. Lacking some unforeseen macro event I see nothing to reverse this trend.

Our depleted inventory is part of the aftermath of the bust in 2006-07. When prices fell off the cliff then we had a tremendous amount of supply force-pushed forward. Many people who may have been planning to sell their properties a few years down the road suddenly found themselves upside down (owing more than the property was worth). The decision became; wait it out and hope the value returns soon, sell for a loss, do a short sale or let the bank take it back. Those that decided to wait it out, in some cases, are still waiting almost a decade later. The majority chose to dispose of their properties before it got any worse. The result for us in 2016 is low inventory because some of what would have been for sale this year was forced onto the market years earlier.

Many of those who decided to wait it out are still waiting. A unit at Magnolia Bay that closed last month for $435,000 was pre-construction priced in 2005 at $589,900. Another unit in the same building that closed in July for $530,000 had a pre-construction price in 2005 of $769,900. The story is the same in the older buildings. A unit in the 43 year old Villa Vista building on Ocean Beach Blvd. sold in 2005 for $367,500 and was then totally remodeled. Even with the remodel it sold last month for $242,000, 2/3 it's price 11 years ago. And, the granddaddy of extremes was a small 1/1 condo a couple of blocks from the beach in Cape Canaveral that sold last month for $55,000 after last selling for $142,000 in 2007.

I give these examples for those who are concerned about prices. Our increase has been healthy and orderly since bottoming out about five or six years ago. Bargains relative to peak prices are still being had as long as buyers can accept that they missed the absolute bottom. I see current prices in our slowly rising market with an abundance of demand as attractive. Long-time readers know I have no reservations calling it the other way if or when I see it.

I heard Bob Iger of Disney say this past week that he is not concerned with any impact from Zika fears to their Florida businesses. Maybe they're immune but I have lost $795 so far from Zika concerns. A pregnant guest cancelled a reservation on advice from her doctor not to travel to "anywhere in Florida". I agree with his "safer than sorry" caution and hope the few number of cases will be confined to the small area in Miami where the only Florida cases have shown up. Luckily we don't see many if any mosquitoes of any kind oceanfront in Cocoa Beach. The sea breeze does more than cool us off on hot days.

Two weeks until snook season opens and, on an unknown date but soon, the mullet run begins. Get the surf fishing gear ready for the best beach fishing of the year.

What's the deal?
Spin the wheel
If the dice are hot...take a shot
Play your cards. Show us what you got
What you're holding
If the cards are cold
Don't go folding
Lady Luck is golden
She favors the bold.

__________________Roll the Bones by Rush

Thursday, July 21, 2016

It's a Mango Year

I dropped off a few towels yesterday to guests from New York who were visiting south Cocoa Beach for the first time. I asked how their stay had been. They said that when they walked out onto the beach the first morning they were concerned that no one else was there. Was something going on they should know about?  By the second morning they realized that very few people on the beach was a normal thing in south Cocoa Beach. Their second comment was that the people in Cocoa Beach were, as a group, the friendliest they had ever encountered in Florida. I'm thinking we'll see them again.

Sales in Cocoa Beach and Cape Canaveral continue at a brisk pace. The 11 year record breaking number of sales in May and June despite record low inventory is evidence of the extraordinary demand for residential properties that we are enjoying. I see no evidence that this has changed. So far 34 units have closed and another 39 have gone under contract since the month began. There are only 237 condos and townhomes for sale at the moment in our two cities and another 25 in planned buildings. We closed more than a third of that existing unit number last month alone.

Of the condo and townhome sales closed so far in July the average selling price was 95% of the last asking price. That "last asking price"qualifier is important. Of the 35% of sales that were on the market less than a month, none had a price drop before accepting a contract. That means they were priced right when listed. Of those who started high and later reduced their asking price, average time on market was 83 days. Sellers take note.

It seems everyone in town is walking around with bulging grocery bags. In most cases they are filled with mangoes like the one pictured. This is one of those years when every mango tree is loaded down and the harvest is so excessive that those with trees are giving mangoes to everyone they know. The locals are forced to eat excessive amounts of mangoes every day or live with the guilt that they are going to waste. We can only make so much salsa and chutney and freezer space eventually runs out. It's a tough problem but we'll see it through. By the way, that mango pictured is as tasty as it is pretty. Juicy, not stringy and as sweet as ice cream.

“If it could only be like this always – always summer, always alone, the fruit always ripe and Aloysius in a good temper…”  __Evelyn Waugh, Brideshead Revisited

Wednesday, July 06, 2016

2016 - First Half Recap

We are squarely in the daily afternoon thunderstorm season with dark fronts like the one pictured a fairly common occurrence. Independence Day fireworks are no match for the fireworks that usually accompany these afternoon storms.

The first half of 2016 ended on a strong note with a record month of property sales in Cocoa Beach and Cape Canaveral. June 2016 was the second busiest month for closed condo and townhouse units since the peak of the boom in 2005 with 77 units recorded as closed so far in the Cocoa Beach MLS. As always, that number could increase as tardy listing agents get around to closing out their sold listings. For perspective, that is 29% of the entire inventory sold in one month. In addition, during the month there were 14 closed single family homes and a single half duplex. A third of the homes sold for more than a half million dollars with two river houses closing above the million dollar mark.


Condo sales were concentrated in the lower price ranges with two thirds of the 77 sales under $250,000. Only three units sold for a half million or more, the highest, one of the three big 4/4 Magnolia Bay units that closed for $565,000. Mortgage use for condo purchases continues to increase with just under half of the condo buyers in June using a mortgage for the purchase.

There were 81 closed single family homes and half duplexes from January 1 through the end of June. There are 55 currently for sale. Buyers who want a single family home on the water in Cocoa Beach have 31 to consider at prices from $2.95 MM for a brand new direct ocean 2 story with 4667 square feet to a nicely remodeled 55 year old 3/2 canal home with 1520 square feet asking $399,500. Almost two thirds of them have been for sale for more than 100 days so we can assume some resistance to the asking prices considering the number of buyers actively looking to purchase. Likewise over half of the condo listings have been on the market over 100 days. Same assumption about pricing can be made for most of these.

About "days on the market": This number can be manipulated by an ambitious listing agent so it can't always be trusted. Your buyer's agent can peek behind the curtain for the true listing history. A listing can be withdrawn and relisted to reset the days on market clock. Same thing can happen with an expiration and relisting. While we're on the subject of accuracy, I get lots of calls and emails from out-of-town buyers who have spotted a waterfront condo unit at a very attractive price on the MLS or one of the other big real estate websites. Those too-good-to-be-true prices are almost always misrepresented properties. While Villages of Seaport is technically an oceanfront community and a listing agent can code a listing there as "oceanfront" they never mention that the cute $115,000 two bedroom townhouse listed as "oceanfront" is actually a half mile from the beach. Likewise a smoking deal on an "oceanfront" Conquistador usually turns out to actually be in the non-waterfront Conquistador building on the west side of Ocean Beach Blvd.

Turtle nesting activity in south Cocoa Beach has been strong with a short walk on the beach most any morning revealing several new nests.


“Arguing with anonymous strangers on the Internet is a sucker's game because they almost always turn out to be—or to be indistinguishable from—self-righteous sixteen-year-olds possessing infinite amounts of free time.”  __Neal Stephenson

Monday, June 27, 2016

Approaching Halftime

Three days and we'll be halfway through another year. At the mid-point of 2016 there are 245 existing condo and townhouse units for sale in Cocoa Beach and Cape Canaveral and another 26 in buildings yet to break ground according to the Cocoa Beach MLS. At the same time there are 63 single family homes for sale. For perspective, ten years ago there were almost 1100 MLS-listed condos for sale in our two cities.

Despite these tight inventory levels, we are continuing to see strong numbers of sales. Since the first of the year 340 condo and townhouse units and 77 single family homes and half duplexes have closed in the two cities. In the month of June we've already closed 57 condo units with a median price of $211,000. Closed direct oceanfront units above the ground floor this month have sold for between $231and $304 per square foot. Nice direct river units have been closing in a range between $155 and $200 a foot. Thirteen of the 53 new condo listings this month are already under contract.

Since June 1, eleven single family homes have closed at prices between $255,000 for a cute little 1042 square foot home one block from the ocean south of downtown Cocoa Beach to $1.1 MM for a gorgeous 14 year old Key West style open river home with 3985 square feet north of 520.

Mortgage rates are close to their all-time low with the national average 30 year rate at 3.56% according to Freddie Mac's weekly survey last Thursday. Despite these historical low rates, over a third of the homes and over half of the condos closed so far this month were purchased with cash. Buyers need to keep this in mind. For a seller, cash is almost always preferable to an offer contingent upon a mortgage. No underwriter, no appraisal (usually) and no delays waiting on loan approval. I'm aware of three appraisals that came in under the contract price last week. Three things can happen when a property appraises below the contract price. 1) the seller can drop the price to the appraisal number and move forward towards closing 2) the buyer can make up the difference by bringing more money to close or 3) the contract falls apart if the parties can't find agreeable middle ground. Far better for a seller to have a cash contract with no appraisal contingency and the accompanying concerns.

"I got my own way of talking, but everything gets done
With a southern accent, where I come from."  __Tom Petty

Saturday, June 11, 2016

2000 Sq.Ft...More or Less

There was an interesting comment from an anonymous reader directed at my  last post. It concerned the condo that I mentioned selling for $318 per square foot. The buyer actually paid $343 per square foot  because of an incorrect MLS listing but may not know that. This particular unit has been listed and relisted many times over the years. Looking back at the previous expired listings I can find the advertised living square footage as 2011, 2170 or 2400 square feet, all from the same listing broker. The living square footage according to the tax appraiser is 2011 with  total square footage at 2400 including balconies. I have no idea where the 2170 size came from. Considering all the errors in previous listings I think it's probably innocent despite the suspicious fact that the errors have always been in the seller's favor.

There are Cocoa Beach condo listings on Zillow right now with inflated sizes that I suspect are outright attempts at deception by the owners. I would advise all buyers and agents to begin checking the advertised size against the tax records. A 159 square foot error doesn't sound like much but at $318 per square foot we're talking over $50,000.

Another relatively common error on the MLS is condo fees. Often an agent or her assistant entering a new listing will look at previous listings for the monthly condo fee amount if they don't already know it. If wrong, the error may go unnoticed. Same thing happens with long-listed units. The monthly fees may have changed since the original listing without getting updated. As always, it is up to a buyer and her agent to verify the data being presented to them. The MLS is only as good as the data being input. How about a FSBO? Same deal except probably even more important to question everything. Ultimately, it's a buyer's responsibility to verify everything.

There were 72 condo units closed in the month of May in Cocoa Beach and Cape Canaveral. A third of those sold in two weeks or less. Slightly more than half sold for cash. Inventory this morning is at 277 units with 25 of those in buildings yet to break ground. Those looking for a good, fairly-priced property don't have a lot to choose from. We are not seeing the same flow of new listings coming on the market that we were seeing earlier this year which is typical. For those hoping to purchase, this means, as always, know what you're looking for, know what a fair price range is and be prepared to offer quickly when you find it.

I witnessed another crazy closing yesterday. The buyer's lender botched the closing disclosure multiple times with inaccurate numbers and finally got it right just as everyone involved was ready to walk away from the deal. Buyers choose your lender carefully. Experience with the local market and property type is worth far more than the lowest promised rate. The guy in the call center in Texas who promises you a rate three basis points less than the local guy may have no idea what his underwriter is going to require for a Florida condo loan and may find out too late to close on time or at all. Rate means nothing if he can't close the deal.

After a week of daily rain, you can almost watch the grass and plants growing. The annoying sound of Florida's favorite tools, the leaf blower and weed eater, are rarely absent during daylight hours this time of year.

"To be one, to be united is a great thing. But to respect the right to be different is maybe even greater."  ___Bono

Tuesday, May 24, 2016

Seven Days in May

I thought a snapshot of the last seven days in the Cocoa Beach and Cape Canaveral real estate market might be interesting. I was expecting to find less activity than I did. In the seven days since last Wednesday, May 18, twenty nine residential properties have gone under contract in our two cities, five of those single family homes. Ten of those properties were on the market less than two weeks.

At the other end of the spectrum, one of the condo units received an accepted contract after being on the market for eight years with eleven price changes. The asking price when contract was accepted was $165,900. At one time during the eight years they were asking $290,000. This is a classic example of denial being dragged kicking and screaming into acceptance of reality. Price it right and it will sell. Some sellers take longer than others to accept that.

During the same seven days, twenty properties closed, nine of those for cash. Prices of the closed properties ranged from $69,000 for a one bedroom Marlin Apartments unit to $785,000 for a beautiful open water single family home in Cocoa Beach. One of the closed condos was another long-listed unit that has been on and off the market since 2008. It was listed for $1,195,000 in 2008 with gradually reducing prices until it closed fully furnished for $690,000 last week. At $318 per square foot, that should be a reality check for the other units in that building asking far above that number but I'm guessing it won't.

I attended one of the more memorable and lengthy closings of my career last week. The closing agent was slower than most and took about twenty to thirty minutes to read through the settlement statement and loan documents while the buyers signed. Sellers had signed earlier and weren't present. When she finally finished I questioned whether the May condo fee had been paid by the sellers since there wasn't a credit on the settlement statement. She responded that she didn't know and would have to find out. First time for everything but shocking nonetheless especially considering that a condo's management must complete an estoppel for every sale showing what a unit owes the association if anything on day of closing.

She left the room closing the door and we discussed what the difference would be. If sellers had not paid May's fee they would owe the buyers $288. If the sellers had paid May's fee, the buyers would owe them a refund of $182 for the remaining twelve days of May. Twenty minutes later the closing agent returned and said that she had forgotten to add the condo fee to the statement and that the buyers owed $16 to the sellers. Huh? The buyers gave her a $20 bill and she disappeared again to get change. Another twenty minutes passed without a peep so I went roaming the halls of the attorney's office and found her in a back room. She said that the lender was preparing a new disclosure reflecting the changed amount. I returned to the closing room and when she came in a little later with the new disclosure and the $4 change I asked how she came up with $16 for 12 days of a $470 fee. She responded with "Can we just let it go and sign this as it is?" She admitted that she had made a $1500 error on an earlier closing that day. We exited the office two hours and ten minutes later for a closing that should have taken less than thirty minutes and that was completed with an acknowledged error on the statement.

Our takeaway: Buyers, sellers and agents (when you are allowed a copy) please read the settlement statement carefully. Mistakes happen. Sellers agents I would ask that you choose the title company/closing agent carefully. Most are professional and pleasant but there are a few out there that are difficult and can make closings feel like torture. Another story next post involving two title companies (one good, one bad) and another difficult closing.

“Never interrupt your enemy when he is making a mistake.” __NapolĂ©on Bonaparte

Saturday, May 14, 2016

Sell in May

Beautiful palm tree bloom at the Cocoa Beach Country Club.

Property sales in April in Cocoa Beach and Cape Canaveral, while brisk, declined year over year for the fifth consecutive month. The record low inventory levels we hit last summer were impacting closed sales numbers by year's end. We have since recovered somewhat in number of properties for sale but still remain well below historic levels. There are 296 condos and townhomes and 71 single family homes for sale this morning in both cities. As I've mentioned before, many of those properties are so overpriced as to be "not really for sale".

In the month of April there were 16 closed sales of single family homes. Median price was $300,000 with all of the upper half waterfront. There were 66 closed condos and townhomes with a median price of $186,000. Half were cash deals. Only two condos closed for more than $300 per square foot. One was a luxurious fully furnished direct ocean Meridian 3/2 and the other was an 844 sf Chateau that squeezed over the $300 mark because of the math of the smaller than average size. Most direct ocean units above the ground floor closed between $235 and $300 per square foot. That fact has not settled into many seller's reality. Hopeful sellers of direct ocean units take note: Units commanding above $300 have been in exceptional condition and usually fully furnished or way below average size as in the case of the Chateau unit. There are 25 units currently asking over $300 per square foot, four of them over $400/sf. In my opinion, only six of the 25 are worth above the magic $300 number and none of them over $400.

Unless we have a strong second half of the month, May sales look to fall well below last year's 71 units. Prices, however, continue their slow upward trajectory in spite of the slowing number of sales. Those looking to buy, as always, need to be able to distinguish those properties that are priced within striking distance of fair value. It is possible to waste a lot of time and energy looking at nice but overpriced property.

The weather in Cocoa Beach the last few weeks has been about as good as it gets. Light winds, moderate temperatures, warm ocean water and a lingering small longboard swell. Add the absence of crowds and it is everything one expects in a small Florida beach town. Today's forecast; sunny with a high of 80 and light variable winds. Superboat races tomorrow offshore Cocoa Beach between the Pier and Lorrie Wilson Park.

"You know what the secret to weight loss is? Don't eat much." ___Simon Cowell

Friday, April 29, 2016

Downtown Cocoa Beach Pub & Restaurant Crawl

I'm happy to report that there is plenty of life in the Banana River contrary to some recent sensationalist social and mainstream media reports. The stone crab claws pictured came from the Banana River this week along with many dozens more not pictured. There appears to be no trace left in late April of the brown tide that killed off thousands of fish in March. This doesn't mean that we shouldn't continue our efforts to reduce our nutrient rich runoff that triggers the algae blooms. Our river is special and beautiful and as we found out, delicate. Despite the brown tide event, it has produced quite a few tasty meals for me this week. I like mine dipped in a little honey-mustard sauce.

Other than Post Office boxes, all of Cocoa Beach including areas north and south of the city limits  share one solitary zip code. We are all 32931 but there can be quite a bit of difference in specific areas. I often talk about this. There is the one that attracts the bulk of the tourists that is centered on the Pier and Ron Jons area and seems to be most outsiders' image of Cocoa Beach. The other Cocoa Beach, the one that I love, begins at the Kelly Slater statue at the fork in the road at 4th St. North as one heads south.

Despite the small size of downtown Cocoa Beach, there is quite a bit there. How many restaurants and bars are there in downtown Cocoa Beach? I used to say more than three dozen but thought I'd take the time to walk the four block area of downtown and make a list. Turns out there are more than I thought. I have provided links to everyone's websites or lacking that a link to their Yelp review page. If one finds themselves thirsty, hungry or wanting to hear live music in downtown Cocoa Beach, there is no good excuse to do without.

Exiting my office just north of 1st St. North on Brevard Ave. I walk a half block north past Jonathan's Pub and The Elks Lodge to N. 2nd St. and east around the corner. On the corner of Orlando Ave. is Jazzy's Mainely Lobster seafood market and restaurant. Taking the sidewalk north up Orlando, immediately next door is The Pig and Whistle British Pub . A half block further north and we're at Burger Country. Right across the street is Slow and Low BBQ and just beyond in the same block is the Surfers Pub and Bruno's Pizzeria. Since I'm keeping this to just the downtown area I walk one block east to Barrier Jacks Restaurant and then turn back south. First I come to the Cocoa Beach Brewing Company and right next door, Pineapple Point bar and restaurant. A couple of buildings down is The Mango Tree fine dining restaurant. I cross the street now to the ocean side and continue south past 1st St. North and first up is The New Habit, sandwiches and ice cream. Around the corner on Minutemen to the beach and we have everyone's favorite dive bar and music venue, The Beach Shack on the ocean and right across the way, also on the ocean is Coconuts, restaurant and bar. Immediately west of Coconuts is one building housing Hunker Down Bar, Fat Kahunas Restaurant, Cafe Playa Cuban Restaurant and shortly to open, The Thirsty Oyster oyster bar. Just across Atlantic Ave. and just south of the currently closed old Surf Restaurant is Venice at Cocoa Beach, bar and restaurant and the Subway sandwich shop. In the first block of Minutemen west of the ocean we have Yen Yens Chinese restaurant, Heidi's Jazz Club, The Heidelburg RestaurantMinutemen Tavern and the Cocoa Beach VFW. Just around the corner across from City Hall on Orlando Ave. is Twin Finnegans Irish Pub. Continuing west on Minutemen on the north side across the street from City Hall we begin with Cocoa Beach Thai and Sushi on the corner and then Casablanca bar. Next door in the Mai Tiki Market we find The Fat Donkey ice cream and desserts, The Tiny Turtle Caribbean Fusion restaurant and Wahoo Coffee Company. Across the alley behind Mai Tiki is Coastal Produce, produce market and deli and across Brevard Ave. is Jenna's Breezeway  restaurant. Walking back east up the alley (Wayne Coombs Way) behind Mai Tiki Market we get to Slingers Cocoa Beach Chicago-style hot dog joint on the right and Roberto's Little Havana Cuban Restaurant on the left. Across Orlando Ave. is Oasis Shaved Ice and The Florida Key Lime Pie Company. Heading north towards N. 1st St. we have the Surfinista, smoothies. coffee and health food and right across Orlando Ave. is Juice and Java Cafe. Around the corner on N. 1st St. behind the Surfinista is The Green Room Cafe health food restaurant. Continuing north on Orlando towards N. 2nd St. we pass Simply Delicious Cafe & Bakery and Surfer Joe's Tropical Ice before passing  Cocoa Beach Sports Pub with the attached Mexican grill. At 2nd St. North I retrace my steps to the office where we find our last eatery directly across Brevard Ave,, the always excellent,  Pompano Grill fine dining.

If I missed any, please let me know. By my count 18 of the over 40 listed have live music at least some of the time and only eight or nine of the 40 plus don't serve any food. If your image of Cocoa Beach is tourists, T-shirt shops and traffic it may be time to venture south..

"I'm sorry about last night. The next time I act in a willful or vain manner, you have my permission to put poison in my food, if you are not already planning to do so. Were you actually involved in a bank robbery? I think one of us is crazy. It's probably me. Take care. Your loving husband, Hack"
__from The House of the Rising Sun by James Lee Burke