Sunday, August 07, 2011

Notes from the field

In December 2007 the owner of a top floor (5th) direct ocean 2/2 unit in Cape Canaveral listed his unit for sale for $399,900. Two direct ocean units had already sold in the building that year, both ground floor and both for at least $125,000 less than his asking. The following year 2008, two other direct ocean units, 3rd and 4th floors, sold for $312,000 and $265,000. He held strong with his asking of $399,900 for his original-condition unit until June of 2009 when he dropped his asking to $350,000. Three months later another ground floor unit closed for $210,000. Unmoved, he held firm until February of 2010 when he dropped his asking to $320,000. The following month, March, two nicer 2nd and 4th floor corner units closed for $250,000 and $240,000. He responded by dropping to $299,000 in April. In November another corner unit closed for $250,000, this one top floor. His response was to drop to $274,900 in December. He dropped again to $260,000 asking price in February this year and watched as a much nicer top floor unit closed for $225,000 last month before finally accepting an offer this past week, price unknown. He refused an offer of $295,000 from one of my clients at one point during the saga.

Here's another very interesting history of an attempt to sell a single family Cocoa Beach home. Our story begins in November 2003. Prices are the MLS asking price.

Nov 2003 - $579,000 original listing agent
Dec 2004 - $749,900
Feb 2005 - $829,000
Mar 2005 - $869,000
May 2006 - $949,500 new listing agent
Jun 2006 - $898,000
Nov 2006 - $868,000 back to original agent
Dec 2006 - $855,000
Jan 2007 - $799,000
April 2007 - $729,000
Sep 2007 - $696,000
May 2008 - $699,000 new listing agent (3rd)
Jul 2008 - $669,000
Nov 2008 - $629,000
Jan 2009 - $599,900 back to original listing agent
Apr 2009 - $589,700
Oct 2009 - $574,000
Feb 2011 - $456,000 new listing agent (4th)
Aug 2011 - $439,000 new listing agent (5th)

This listing has had five different listing agents and eleven different MLS numbers over the years. The MLS right now is showing a total combined days on the market as two.

How about the new condo that, since being completed in 2006, was offered on and off by the developer at prices from the high $600,000s until 2009 when it was listed for $499,000 and stayed on the MLS with steadily decreasing prices until it closed last week for $319,000.

Or the other 92 listings in Cocoa Beach and Cape Canaveral that have been on the MLS for more than a year? That number is probably more than twice that if you include the listings that have had their "days on market" number manipulated downward by resourceful agents trying to disguise the stigma of a high DOM number. Barring a condition that renders a property unsaleable, if it's been for sale for a year without selling, the price is almost certainly too high. says this about denial, "In its full form, it is totally subconscious, and sufferers may be as mystified by the behavior of people around them as those people are by the behavior of the sufferers. It may also have a significant conscious element, where the sufferer is simply 'turning a blind eye' to an uncomfortable situation."

I'm never short (pun intended) of good short sale stories. This was the best of several this week. The listing agent of a short sale called the buyer's agent yesterday with a progress report. The contract was signed by the seller and negotiations with the bank started in April. Listing agent said that the 2nd lien holder had responded wanting more money than the $6000 being offered them by the 1st mortgage lender.

"How much?" the buyer's agent asked.
"They didn't say." listing agent. "I didn't ask but the second mortgage is more than the first."

Hmm. Turns out that some genius at SunTrust signed a subordination agreement on the $450,000 home equity loan that was in first position back in 2006 when the owner of the 2/2 ocean condo went to Amstar for a second loan of $396,000. The result of that subordination agreement was that SunTrust became 2nd lien-holder on their $450,000 behind Amstar's $396,000 1st mortgage position. This could have something to do with SunTrust being so difficult lately with condo loans. You know, barn door slams after the horses have galloped away. I wonder if the Einstein at SunTrust who signed the subordination agreement in 2006, effectively throwing $450,000 out the window, is still employed by the bank. Maybe he's the one in underwriting venting his frustration on new borrowers. On the other hand, the guy at Amstar who demanded the subordination agreement from SunTrust might make a good Federal Reserve Chairman. As smart as his move was at the time, Amstar, or whoever is holding that 1st position note today, is still going to lose $150,000 plus. Hurtful but nothing like the almost half million dollar hit SunTrust is about to take. Incidentally, the asking price of this short sale in April this year was $255,000 or $591,000 less than the amount owed, not including back fees and interest. Think this short sale is getting approval? I'll venture a wild guess of NO WAY.

I wonder how this $450,000 loan is portrayed on the bank's books. It is essentially worthless but it is obviously worth more as an accounting entry than the $6000 being offered by Amstar. The bigger question is how much of this zero-worth stuff is sitting on this and other banks' books.

" The problem with quotes you find on the internet is that you cant be sure how accurate they are." - Abraham Lincoln