Inspection Hijinks

Most residential real estate contracts in our area will contain an inspection and right to cancel period during which the buyer can cancel for any reason with no penalty. This period is designed to allow the buyer time to physically inspect the property and investigate anything else about the property before being bound to honor the contract. Inspections can and do reveal hidden issues serious enough to call for cancellation or renegotiation. The most common hidden issue on beach properties is a rusted, near-death exterior AC compressor unit on the roof. Unless the seller disclosed that the unit was shot or at the end of it's life expectancy it's reasonable for the buyer to ask for a price concession after that discovery. If your agent advises you to make an offer with a plan to renegotiate the price post inspection based on some unknown issue that she hopes is discovered during inspection, she is probably giving you bad advice. Same for a readily observable issue. You can't expect a seller to agree to a price concession off an already agreed upon price for a cracked driveway when the buyer and her agent walked across that same driveway to get to the front door the very first visit. Be reasonable. Concessions do happen but rarely without honest and fair reason. If the seller is holding a backup contract, a concession request might as well be a knock-knock joke.

Sellers, if you know of hidden issues, disclose them up front and negotiate with those issues known while you still have negotiating strength. If you know the rooftop AC is at the end of it's life, disclose it and make that part of the first offer exchange. Waiting until two weeks post contract to negotiate shifts the power to the buyer. There is one exception to this, existence of a backup contract. A seller holding a backup contract has the power to refuse any concessions knowing that there is a second buyer ready to perform if the first walks away. For this reason, backup contracts make sense for sellers as it gives them retained negotiating strength in the event of post-inspection requests. For buyers, I always recommend doing a backup contract as it can easily become the primary contract when the seller, emboldened by the existence of the backup, refuses to concede to the first buyers demands. I've seen a prideful buyer walk away from an otherwise fairly priced contract over a failed concession request.

Fishing has been on fire in the Banana River and in the ocean. Redfish and trout are being caught in good numbers around the Thousand Islands of Cocoa Beach and some big out-of-season snook have been dragged in from the beach and just beyond. Night fishing at the Port has  also productive. Bait of choice for the snook is a live croaker. A few lucky fishermen have landed giant tarpon from kayaks just beyond the surf. This always includes a thrilling Nantucket sleigh ride until these big fish tire. A 100 pound plus silver king from a small kayak is a catch of a lifetime. Further offshore cobia, dolphin, kingfish and a few sailfish are being caught. Get out there and enjoy it if you get a chance. No fishing license required if fishing from a shore.

"We said we'd never fit in when we were really just like them; does rebellion ever make a difference?" __So Long, Astoria, The Ataris

Watch Your Toes

Sorry for the big gap between posts. I have no good excuse. Call it a summer slowdown, heat exhaustion or a touch of the vapors. Hold on. In 2017 "the vapors" could be construed differently than what my grandmother meant when she used the term. I'm using it in her context. Anyhow, as of this morning the Cocoa Beach MLS is reporting 349 closed condo and townhouse sales so far in 2017 in Cocoa Beach and Cape Canaveral. The actual number is probably a handful more. Tardy listing agents, you know, too busy to update sold listings. Fifty of those sales closed this month, so despite the seemingly slowed market, we are on track for another strong month. To put a little perspective on that number, there are only 199 existing units for sale right now in the two cities. At this rate the entire existing inventory will be gone by October 1.

Of the 50 sold units so far this month only five were east facing, direct ocean units, the traditional bread and butter of our market. As the inventory has dwindled, side ocean view, river units and non-waterfront properties have taken up the slack. Half of the sold units were purchased with cash and half sold in the first 36 days on the market, ten of them in the first week.

There are 63 single family homes for sale this morning at prices between $3 MM and $250,000 with the median over a half million. Nine have closed so far this month.

I like to scan the Weather Channel during cold months for a touch of Floridian schadenfreude but it has been equally entertaining this month. Portland hit 100 this week and in Arizona mailboxes were melting. Thank geography for the ocean breeze which kept things in Cocoa Beach quite pleasant, as usual.

A few big breeder snook have been caught in the surf the last few weeks for those who know the bait and the technique. Catch and release only until September 1 and then 28" minimum and 32" maximum, one per day. Enjoy these great summer days and please don't forget the sunscreen and don't attempt to walk to the ocean without flip flops. The sand will roast the bottom of typical American feet. How bout that Minutemen streetscape? If you haven't been downtown recently, check it out some night. The Minutemen corridor has been transformed and I give the finished product a double thumbs up and two snaps.

"Tortured numbers will confess to anything." __whodidntante

June Flowers and Property Sales

It might have been nothing more than a cruel tease but we got our first long, soaking rain of the season on Friday after months of little to no rainfall. Every green and blooming thing in town is radiating happiness and it seems to be affecting the humans as well.

The month of May finished with a bang in the local real estate market. As of this morning, the MLS is showing 67 condos and townhomes closed in Cocoa Beach and Cape Canaveral during the month. As is normal in our market, over half sold for cash and ten sold in the first week on the market. Average days on the market are creeping up as sellers, emboldened by low inventory and rising prices, are listing with ever more optimistic initial asking prices. As always, the market ultimately decides the selling price, not the seller. The MLS is showing 204 total existing condos and townhomes for sale in Cocoa Beach and Cape Canaveral this morning and another 27 to-be-built units.

Action in the higher end of the condo market was subdued with only ten of the sold units closing for more than $399,000. Over half closed for less than $220,000. Decent oceanfront units were closing for prices mainly in the $230 to $285/sf range with only one smaller unit commanding over $300 per square foot. For perspective, there are 33 units currently asking over $300 per square foot. Only a few of them deserve that price.

Single family home sales continued at a strong pace with 16 closed in May, five of them over a half million. Only three of the homes sold for cash. A third of the homes sold in the first 30 days on the market. There are 73 homes currently for sale in the two cities.

Bottom Line
The song remains the same; know how to, or have a buyer's agent who does, accurately estimate fair value of properties for sale. If a listing is priced closed to fair value, it usually sells quickly. If a condo, know that over half the interested parties will likely be offering cash. Those who have been looking for a while will know that putting off an offer until travel arrangements have been made will likely contribute to being to the table too late. It's possible and usually advisable for out of town buyers to have their agent go ahead and offer on attractively priced properties sight unseen as long as they can negotiate a long enough inspection period to accommodate travel here for viewing. As we oldtime surfers used to say, "the lip does not linger".

SpaceX launched a previously flown Dragon Spacecraft on a resupply mission to the ISS yesterday and successfully landed the first stage of the Falcon 9 rocket vertically at LZ1 at the Cape after stage separation. The tremendous sonic boom of the returning Falcon loosened caulking and fillings all over town.

"A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects."  __Robert Heinlein

Don't Panic...Yet

A fine example of Jurassic World Cocoa Beach wildlife. I've seen this guy chase snakes away.

A few things: Several dozen property owners in Cocoa Beach and Cape Canaveral woke up Sunday morning of Memorial Day weekend to find (if they looked) that their property was being advertised on Zillow as "foreclosed" or "pre-foreclosure (auction)". Must have made for an interesting morning for those who caught it. Most probably didn't but you can bet that real estate agents across our area are frantically researching the flood of new distressed properties that their Zillow-using clients are calling about. The handful that I looked at when I got the alert proved to be mostly previously foreclosed properties that had long since been sold and off the MLS in some case for over six months. It was either a computer glitch during the night or a deliberate ploy by Zillow to increase traffic, their life-blood. We may never know. For the record, of the 298 residential listings in Cocoa Beach and Cape Canaveral this morning only five are distressed, four of them bank-owned, one auction and zero short sales.

In the shenanigans category; another agent mentioned to me that a settlement statement he saw last week had a substantial "marketing fee" being paid by the seller to her broker. This was in addition to the commission already being paid which was at the top of the range I'm used to seeing. Not sure what extra "marketing" on this particular property deserved a bonus beyond what is usually provided in a listing but, hey, if they'll sign agreeing to pay more, why not? My opinion; disgraceful gouging, but I don't have all the details and perhaps the seller insisted to weekend ads in The Telegraph and Le Monde. to which the listing agent agreed with the extra fee.

We are resting at a measly 200 total existing condos and townhomes actively for sale in Cocoa Beach and Cape Canaveral. There are another 27 pre-construction units offered to the market's collective indifference. The low inventory numbers may have finally put the brakes on the sales rate. In the last two weeks only 21 units have gone under contract, quite a slow-down from activity in the first quarter. Five of those sold within the first five days on the market. So far in the month of May, 53 units have closed, 32 of them bought with cash. Fifteen single family homes have closed so far in May with only three of those purchased with cash.

Speculations: A frequent question I get is "Should I wait to look for a property to purchase in Cocoa Beach assuming prices will be better later?" Looking at our 200 unit inventory, which I though would level out many dozens of units higher, I don't see any forces that would contribute to prices retreating from current levels. This is, of course, barring a macro event like dollar collapse, war with North Korea or another country gaining control of our executive branch. Demand is still high and the appreciation we see appears to be at a healthy sustainable rate. Without a flood of new properties, the demand should continue to exceed the supply well into next year and beyond. The takeaway for those who agree is to continue the search if purchasing is the goal. Waiting for a dip in prices could prove expensive.

There's an excellent new fish market downtown Cocoa Beach on the beach side of South Atlantic just south of Minutemen next to the sunglasses shop. It's Coconut's Fresh Catch Market and it's not what you might expect. I've been in three times and I've found big, fresh cuts of locally-caught fish, tripletail, cobia, tuna and mahi in addition to some other not-local fish. Homemade crab cakes ready to cook for $5 each. The prices are slightly higher than the markets at the Port but the difference won't buy the gas there and back and the quality is equal. If you like fresh seafood, check them out and support this welcome addition to the community.

On this Memorial Day we celebrate and honor those who made the greatest sacrifice defending our freedom and way of life. Think about the idea of someone you don't know dying to protect your right to the way of life you enjoy. That is what this holiday is about. In addition, there are thousands of living Americans serving right now knowing the possibility of their making the greatest sacrifice is part of their service. To those before you and to you, thank you and a tip o' the glass.

“There are so many ways to be brave in this world. Sometimes bravery involves laying down your life for something bigger than yourself, or for someone else. Sometimes it involves giving up everything you have ever known, or everyone you have ever loved, for the sake of something greater.
 
But sometimes it doesn't. Sometimes it is nothing more than gritting your teeth through pain, and the work of every day, the slow walk toward a better life." __Veronica Roth, Allegiant

Fear and Loathing in Cocoa Beach

I apologize for the long interval between posts. Over the last couple of weeks I began writing two different tales of shenanigans and outrageous behavior in the local real estate market, a favorite subject for writer and reader. Alas, a moment of level-headedness led me to shelve both articles. Rather than leave the reader hanging, briefly, one was about an episode of collective insanity at one of Cocoa Beach's largest (and tallest) condos. After years of willingly filling out prospective buyers' lenders' questionnaires, the association decided that they would no longer complete the required form. I happened to be the unfortunate agent with a buyer seeking a mortgage who was first confronted with the new policy. The association, after refusing to complete the form, referred the lender to the association's attorney who likewise refused citing imagined liability. What the association and their attorney failed to anticipate was the consequence of not completing the form. Without a completed form, the 108 owners in the building would not be able to sell to someone who needed a mortgage to purchase. It would effectively become a cash-only building. Here's what the form looks like for those interested.

After a few owners were alerted to the consequence of the new policy a small uprising ignited, the questionnaire was swiftly completed by a Board member and the loan package proceeded to underwriting, disaster averted.

The other tale of real estate drama I chose not to share was having my behind chewed viciously by a listing agent over some excluded contents in a "fully furnished" condo. She felt that I was being unreasonable in asking for an excluded items list prior to making our best and final offer. We ultimately offered without the list which was then produced, five days after listing, with, in our opinion, excessive exclusions. We ultimately reached agreement but not before I endured a scathing tirade and a hangup. All part of the job. About hangups: I got to thinking that punching the red "END" button on a cell phone, no matter how vigorously, is not nearly as gratifying as slamming a heavy phone receiver into its cradle. The millennials among us will never experience that warm fuzzy. On to real estate activity in Cocoa Beach and Cape Canaveral.

Since May 1, fourteen single family homes and 45 condos and townhomes in our two cities have received accepted contracts and another 70 new listings have come on the market. During the same time 46 properties have closed. Over half, 26, of the sold properties sold for cash, no mortgage. Inventory this morning sits at 206 existing condos and townhomes for sale in Cocoa Beach and Cape Canaveral. There are another 27 pre-construction units offered but they seem to be attracting very little attention despite compelling pricing at at least one of the projects. There are 72 single family homes for sale in the two cities, half of them waterfront and just under half asking over a half million.

Super boat races in the ocean off Cocoa Beach this weekend. Best places to view other than from a helicopter or boat will be in the stretch from about the Pier to Xanadu. The boats will be available for up close viewing on their trailers Friday night downtown. Hope to see some of you there.

"We felt the lightning
 And we waited on the thunder."  __Bob Seger

This Is No Social Crisis

Minutemen Causeway streetscape is nearing completion. Landscaping is being plugged in and it looks like the finished product will be beautiful. It's very welcomed. The oceanfront block is closed to vehicular traffic and is pedestrian only now, pavers and planters from Atlantic Ave. to the beach.

Sales activity in Cocoa Beach and Cape Canaveral continues at a plodding pace thanks to the depleted and showing no signs of changing inventory. With a total condo and townhome inventory of 209 existing units in the two cities, finding a suitable property has become more of an epic quest than a narrowing down of suitable possibilities. Those looking for a single family home are even more constrained with a total of 72 possibilities, half of those asking a half million or more.

In the two weeks since Sunday April 16, forty three people were successful in their condo search and were able to put units under contract. During the same two weeks nine single family homes were contracted. With a roster of hundreds of agents trying to get a slice of the beach pie and only a few dozen actually involved in transactions, you may soon find your last agent bagging groceries at Publix. Those with a gainfully employed spouse may have the luxury of retreating beyond the break on a locally shaped log. Tasty waves in Cocoa Beach are in much greater supply than attractively-priced real estate listings.

A third of the condos were on the market less than a month and half of those less than a week. It's competitive for buyers and units that are priced right when listed are gone quickly. This has changed seller and listing agent behavior. Why not overprice and see what happens? The seller can always reduce the price later and the listing agents need inventory so anything, no matter the price, is good for them. Speaking of overpaying, buyers, when faced with an unreasonable seller of a property they like, have to ask themselves whether it makes sense to knowingly overpay by X% now or risk not finding another suitable property during the time prices move up by X+Y%. Buyers who made this difficult decision at any time in the last several years came out ahead. Buyers who think like I do that the demand and supply dynamic will continue to nudge prices higher should not run from a small overpayment. Conversely, buyers who think that prices will not continue the current trend should stick to their guns and not pay a dime more than what the comps suggest is current fair value. It's important to know how to figure out what that number is or have an agent who can. No matter who is doing the estimation remember that one comp does not determine fair value. Randolph may have sold his unit down the hall for $220,000 but that doesn't automatically make mine worth $220,000 when similar units in other buildings are selling for $250,000. Be smart and look at all angles. Creative thinking may be rewarded.

You can't always get it
When you really want it
You can't always get it at all
Just because there's space
In your life it's a waste
___________________The Who - Another Tricky Day

Welcome to the Slowdown

Snowbird season ended with a bang Easter Sunday and we woke up Monday morning to a different, much less hectic town. I can once again drive from downtown Cocoa Beach to Port Canaveral for lunch and expect to make the trip there, eat an excellent fish sandwich dockside and drive back in little more than an hour if need be.

In the week from Sunday April 9, 2017, through Sunday, April 16, a total of 18 condo units and seven single family homes received accepted contracts in Cocoa Beach and Cape Canaveral. The homes were in a range of asking prices between $289,900 for a non-waterfront 4/2 three blocks from the beach to $749,500 for a gorgeous two story 3000 square foot beauty on a canal.

None of the condos contracted during the week were asking over a half million and half of them were under $200,000. Current condo inventory for sale stands at 210 exiting units in the two cities. That's about a three month supply at the current sales rate. Pickings are slim for the fairly large numbers of prospective buyers.

Those of us in south Cocoa Beach have been entertained in the last week or two by frequent sightings of a wild bobcat that has been roaming the dunes. The swamp rabbit that's been eating my backyard flowers has apparently been successfully avoiding contact with this large predator as I continue to wake up every day to fewer flowers. Those of you with pets are probably well-advised to keep the little fluffies safely inside for a while.

Crews have been making noticeable progress (finally) on the Minutemen streetscape project with the center block leveled and sidewalk work begun. Palm trees are going in on the ocean end of Minutemen and my first impression is positive. It's a great visual improvement. Don't forget Friday Fest this Friday night downtown. I hope to see y'all there.

"A Southern accent is not a club in my bag." __John Oliver

Winding Down

The crush of snowbird season 2017 is firmly behind us now. After Easter we will drift into a brief slow season before school is done for the year and summer vacations kick in. Anyone who has only seen Cocoa Beach during the busy snowbird or summer seasons might be surprised at the laid-back feel here in late April and May. It's a good time to be in Cocoa Beach.

Property sales were slower in Cocoa Beach and Cape Canaveral this past week, Sunday April 2 through today. There were 15 condos and two single family homes contracted during the seven day period while we gained 13 new condo listings and 5 new single family homes. Our inventory of properties for sale is virtually unchanged from last week with 219 existing condos and townhomes and 68 single family homes currently offered. Only a third of the single families have been for sale for longer than three months. In contrast, over half of the condos have been for sale longer than three months, a sure sign of overpricing. Of the 174 condos closed so far in 2017, 54 sold in the first two weeks on the market with 35 of those gone in the first five days. Price it right and it's gone immediately.

I would advise those of you looking to purchase to get your finances in order prior to starting the search. If you're going to be getting a mortgage, talk to lenders now, choose the one you want to work with and begin the process. You are guaranteed to become frustrated along the way with the many requests for documents so getting in front of that will make your life less stressful. Same for cash buyers. Know how long it will take for your funds to become liquid and have a proof of funds document ready to provide with your offer.

Post-Inspection Price Reductions

The large majority of purchase contracts that I see for beach properties are written using the FAR-BAR "As-Is" contract. "As-Is" in theory means that the contract is for the property in the condition it's now in, "as-is". In practice, "As-Is" means the buyer is willing to purchase the property for this price IF no deal-killing conditions are found during inspection. It's not uncommon for the buyer to go back to the seller after inspections have been done and ask for either repairs or a price concession for issues found during inspection. That is fair for hidden issues. Here on the beach the number one hidden issue is a rooftop AC compressor with one rusted foot in the grave. That is a reasonable issue for price renegotiation if it wasn't disclosed already. Going back after inspections and asking for concessions for issues that were either disclosed or are plainly visible is not going to be well received. The "As-Is" contract gives the buyer "sole discretion" to cancel the contract and receive refund of deposit if done within the inspection period. That puts total control of the contract (read: negotiating strength) in the buyer's hands. If the seller refuses to renegotiate the buyer can either stick with the original contract and move forward or cancel. It's worth keeping in mind that in the current market, a seller stands a good chance of finding another buyer while a buyer may have a much harder time finding another suitable similar property.

It's Master's Sunday and we have four players within two stokes of the leaders, Justin Rose and Sergio Garcia. It's gonna be a good one. John John Florence won the Margaret River Pro in West Oz yesterday at Main Break in sizable and challenging surf. John has all the raw talent that we saw from Kelly at the same age. The Cocoa Beach business golf league kicks back off this Tuesday at noon. Anyone who'd like to get together for a weekly nine holes is welcome. It's fun, rates are super low and there is a chance to win a few bucks on a skin. Come on out. It's a friendly bunch of guys and girls. Tee off anytime between noon and dark.

"My parents didn't want to move to Florida but they turned sixty and that's the law."  __Jerry Seinfeld