Tuesday, December 31, 2013

In the Rearview

It's the last day of 2013 and the time when we look back at the significant events of the year. For the Cocoa Beach real estate market it was a year of continued recovery with one massive unexpected event. Our big event was the change of MLS providers in July that destroyed the Melbourne Association of Realtors. Without going into detail, their leadership went all-in on an MLS bluff that was called by the membership. Brevard County will have one united Realtor association in 2014 as a result. Democracy won the day. I suspect my suggestion of a new name, Florida United Brevard Area Realtors, will be rejected because of the unfortunate acronym. Whatever.

As was evident much earlier in the year, 2013 finished as another record-breaking year in numbers of sold properties in Cocoa Beach and Cape Canaveral. The MLS this morning is showing 659 sold condos and townhomes in the year in our two cities and 121 single family and half-duplex homes. We have to go all the way back to 2005 to find another year that exceeds those numbers. Active for sale inventory stands at about half the sold numbers for the year. Subtract the yet-to-be-built (and unlikely to be built soon) properties and pickings are slim.

The lowest priced single family home to sell in the year was a 1000 square foot 3/1 in need of a lot of work in Cape Canaveral close to the beach that closed for $85,000. Highest price paid in the year was $1,430,000 for a furnished seven year old 4/3.5 with 3379 square feet on 50' of ocean in south Cocoa Beach. Just over half of all single family homes sold were waterfront.

Eight small (+-400sf) condos sold at prices between $20,000 and $30,000. A total of 165 sold for less than $100,000. In the half million dollars and up range, there were 23 sales with the highest at $750,000 for a penthouse 4th floor 4/4 corner on the river at West End Rd. behind Florida Seafood. It was furnished, had 10' ceilings, 4299 square feet and came with 2 garage spots. Eight of the $500,000+ sales were at the Meridian.

23% (149 units) of the closed condos were either short sales or foreclosures. There are 32 total short sales and foreclosures currently for sale out of 312 total.

2014 promises to be interesting and different than 2013. Sellers can reasonably expect to get more than they may have gotten this year. Whether they get enough to make up for the cost of waiting remains to be seen. I expect the number of sales to be less in the coming year even as prices are higher and I expect the decline in distressed sales to continue as well. To those involved in our market I wish you a prosperous new year. Snowbirds, stop by my office while you're in town and say Hello. Don't forget to make some room at the free coffee station at Publix for your fellow birds. Happy New Year, all.

For the loser now
Will be later to win
For the times they are a-changin'.
_____Bob Dylan

Tuesday, December 17, 2013

Blast From the Past

Another One Bites the Dust (originally posted October 4, 2007)  In 2013 we saw almost all the remaining Magnolia Bay units finally sell. It's been a long hard road. I thought the readers who may not remember the drama of 2007 during the construction might appreciate this look back at the time of construction and some of the unintended consequences. There is a new store in the old Express Grocer spot now and they seem to be doing OK. The site of the old trailer park is occupied on one half by a self-storage facility and the other half by nothing. I have no idea where Sam and Gary are these days.

Oct. 4, 2007 - This unwinding of the housing bubble has touched many lives. Besides the flippers who were too late to the party and people who bought more home than they could afford with exotic mortgages, some innocent victims have been dragged down, too. A deadbeat homeowner in my building has decided to walk away from her mortgage and will be leaving the remaining owners with thousands in unpaid assessments. My life will go on even though it riles me to have to pay for someone else's bad choices. It may hurt more for my retired neighbors. More heartbreaking is the impact on the decent people who run the small grocery store close to my home. They didn't speculate on pre-construction condos or try to flip houses and yet their lives have been changed forever.

It all began when construction began on the big empty parcel of land that was to become Magnolia Bay. Business picked up as workers walked over for lunch, snacks, cigarettes and so forth and the promise of all the new families that would be moving in made the future look bright. Shortly thereafter, the trailer park next door that housed the biggest part of our grocer's customers was purchased. With plans to build townhomes on the site, the trailers were progressively moved out or torn down until the property was empty. Things were still looking good even with the loss of the regulars. With 77 new half million dollar plus Magnolia Bay units and 18 new townhomes right next door, the customer base was growing and being upgraded and the construction workers were providing business in the interim. Life was good.

Then, Magnolia Bay sales slowed and the planned 4 buildings got scaled back to 3. Scheduled closings failed to happen and the construction workers finished their work and moved on. Today, the grand buildings at Magnolia Bay are mostly empty and dust blows in the sea breeze on the site of the old trailer park. The only townhomes there today are in the picture on the "coming soon" sign. Business at the grocer who stocked my favorite beer in a corner of the walk-in cooler at my request dried up to a trickle and, this week, he told me that this is his last month there. He can't make it any longer.

There are multiple losers in this story; the developers of Magnolia Bay, the trailer park residents, some of whom had lived there for decades, the owners of the trailer park property, the customers of Express Grocer including me and, most of all, Sam, the grocer and his family, and Gary, his long-time employee, who has been known to extend credit to a down-on-his-luck customer or two. Sam, your family, and Gary, you will be missed by many. You are good people.

My favorite Express Grocer memory will always be the sign that appeared on the door one day. It read:

Do not ask Gary for credit. He is not allowed to give it anymore. Sam

Wednesday, December 11, 2013

Optimistic Bankers

US temps 12-11-2103
I made a quick mention in the last post about the trend in asking prices for foreclosures. The recent trend has been towards higher and less aggressive asking prices. In the not too distant past, most foreclosures in the Cocoa Beach and Cape Canaveral market would have multiple offers within the first few days after hitting the MLS and would usually sell for full or above asking price. That is no longer true. The buyers have given a collective Ho Hum to the banks' recent optimistic prices and many attractive foreclosure properties are not getting quick offers. Of the 23 bank-owned condos on the MLS this morning, 11 have been listed for longer than a month and 9 have reduced the original asking price, one by 24%, still without a sale. Five of the 7 short sales currently active have reduced their original price.

Our takeaway: just because it's a distressed sale doesn't mean the asking price is a deal. Know the current value and offer accordingly. As always, knowledge is power.

""If you can't fix it with a hammer, you've got an electrical problem." ___unknown

Thursday, December 05, 2013

Where Are We Right Now?

It seems just yesterday that I was writing the year-end wrap up for 2012 in Cocoa Beach and Cape Canaveral and commenting on the record-breaking number of sales. We still have the month of December to go and we've already exceeded 2012's numbers with 623 MLS-listed condos and 116 single family homes closed so far. Inventory numbers have increased recently but after we remove the noise of the pre-construction listings and the way-overpriced, been-on-the-market-forever listings we have about a five month supply of properties for sale at the current sales rate. The MLS shows 310 condos and townhomes for sale this morning with 55 of those having been listed for over a year. Most everything that's been for sale for over a year qualifies for my "not really for sale" designation for obvious reasons. There are 31 short sales and foreclosures among the 310 units for sale including a 4th floor Meridian asking $649,900. The banks' asking prices for foreclosures have crept up into the meh range and many of the foreclosures are languishing on the market as a result. There are only a few of the 31 distressed sales that I would consider a "great" deal.

Here's an excerpt from a post exactly one year ago. The sentiment expressed persists.

"I had an interesting conversation with a prospective buyer last week. Among his criteria was "being able to take advantage of the poor market conditions in the area in terms of significant below market pricing and leveraging the fact that he'd be paying cash". "Poor market conditions"? The current market would be better described as en fuego (see the previous post). "Significant below market pricing"? I'm not aware of any sales happening at significantly-below market prices. Buyers are standing by ready to purchase good properties when they're priced at current levels with over half of them paying cash. I suspect this particular buyer is going to be looking for a very long time unless he modifies his expectations."

The song remains the same. Buyers with specific criteria are having to search for months in many cases for the right property. Those with popular criteria like direct ocean condo above the ground floor sub-$300K (5 available today) or canalfront home under $350K (3 available today) can expect competition when a good unit hits the market. Buyers, be patient and ready to move quickly when a desirable property surfaces. Even though we have moved off the bottom, prices have not run away. Deals exist for the persistent. Those seeking a mortgage would be advised to start the process before starting the search. A note about  search criteria. Don't trust descriptions in the MLS to be accurate. I searched for oceanfront condos above the ground floor with a front door facing west asking less than $300,000. The results included two Conquistador units in the building across the street from the ocean and seven others with balconies facing either north or south. Some actually had doors facing west with balconies facing south but some others were just incorrectly described. Maybe inadvertently. Maybe not. The internet is great for buyers doing their own searches from afar but nothing beats boots on the ground here and local knowledge. If you need those boots and knowledge, contact me. My motto; No BS.

Denver this morning is at zero degrees with an expected high of 16. We are forecast to reach 77 under clear blue skies with a light SE breeze. Offshore fishermen are catching sailfish in decent numbers and some pompano are being caught in the surf. Conditions are ideal for both at the moment.

The photos are of  Tuesday's launch of the Space X Falcon 9 in it's first mission to deliver a commercial satellite to geostationary orbit. The new kid in town makes a big statement with this mission.

"I always tell people, the first $500,000 is the easy part of the deal. The deal will come apart over nickels and dimes." ____Mike Jaquish

Sunday, November 24, 2013

Fool Me Once

NOTICE: We've had some major email disruptions in the past month and I have not received all mails. If I haven't responded to a recent mail, chances are, yours was one of the lost ones. Please resend to the hotmail address in the header of this blog and I'll respond immediately.

What can I believe when looking at real estate listings online? I spoke with someone yesterday who noticed a listing that was previously under contract had just come back on the market at Realtor.com. When I researched the MLS history it showed as still under contract and continuously so since the end of October. So, why did Realtor.com show it as back on the market? The only thing I can figure out is that when the listing agent changed the status from "contingent" to "pending" it triggered a status change which conveniently and incorrectly defaulted to "active/for sale" status rather than "under contract". More page views = more revenue. None of the major non-MLS real estate sites can be trusted to be up to date and accurate. Actually, nor can BrevardMLS.com, but, it is the most accurate by a mile.

The errors on BrevardMLS.com are mostly related to agent errors or circumstances, not a policy intended to boost page views. Foreclosure listings often remain active for a few days following acceptance of a contract because the banks are slow to get all the paperwork signed and delivered. Short sale listings are sometimes left in active status for months even though the seller has accepted an offer that is being negotiated with the bank. Sometimes a listing agent will mark the wrong area by accident. AND, some listings marked as "waterfront" may be a looong way from the water. There are two active listings this morning that are designated as "waterfront/ocean" that are over a half mile from the ocean. The condo project that they are a part of extends to the ocean so these listings are allowed to be tagged as oceanfront even though some units are as far as 3/4 mile from the beach. The units here are nice and the prices reflect the distance but the "oceanfront" status is misleading.Your agent can fill you in on the details of any too-good-to-be-true listing.

For buyers looking for listings with specific criteria, the best way to be on top of the accurate data is to have your agent set up an auto-alert directly within BrevardMLS.com with whatever criteria you desire. The system will send you an email whenever a new property with your criteria is listed or an existing listing has a price change. The mainstream for-profit real estate sites can't match the timeliness or accuracy of the source. I'd be happy to set up an alert for any readers without one.

When the axe came into the woods, many of the trees said, "At least the handle is one of us."  __Turkish proverb

Friday, November 15, 2013

10 More Questions

Do agents lie about multiple offers? - I've written about this before. It seems to be universal among buyers to believe that the listing agent is always lying when she says she's received another offer. People, it just ain't so. It probably has happened somewhere but there is absolutely no need for a listing agent to make up a story about another offer in hopes of getting a slightly higher price. (see next question) The chance of chasing off a distrusting buyer is too great. Buyers, if you receive a call for your best and highest offer because of the existence of another offer, don't shoot yourself in the foot by withdrawing. If you wanted the property enough to place an offer in the first place, at the very least, stick with your original offer. It's your call if you want to sweeten your offer.

Do agents try to influence higher price for greater commission? - Not likely ever true. There seems to be a belief that agents, buyer's and seller's, want a higher price in order to get a greater commission. The math proves this one wrong. Even if either or both agents were able to influence a price up by $10,000, each agent's check would increase by a couple of hundred dollars in most cases. Not worth the risk of losing a deal for a couple of Benjamins.

Don't both agents work for the seller? - Absolutely not. The seller pays all the commission to their broker in most cases who shares part of it with the selling broker. Even so, as a buyer's agent, I am working solely for my buyer's best interest. The only exception to this would be when the buyer's agent is also the listing agent or when the listing is within the same brokerage as the buyer's agent. This is a persuasive argument for not using a buyer's agent from a company with a lot of listings in the market the buyer has targeted. A buyer's agent showing one of her company's listings is prohibited by law from advocated on behalf of the buyer. She must remain neutral, honest and fair. I, as a buyer's agent from another company, am not so restrained. In fact, I am bound to fight for my client and to use all fair means to get the best possible deal. Remember that when thinking about contacting a listing agent directly. It is rarely in a buyer's best interest to deal directly with the listing agent even if that agent is willing to concede part of the commission. See the next question.

Can't buyers get a better deal by dealing with the listing agent? - Not usually. As I explained above, the listing agent can't advocate for the buyer. While she may agree to shave off a percentage point for getting both sides of the deal she is prohibited from telling you, for instance, that your offer is $10,000 more than the seller countered my client last month in his failed attempt to buy the house. Think I'd let you make that too-high offer? Not.

Do agents not show buyers all listings? - sometimes. With the public able to view all listings on the internet, a buyer is able to do her own research and to find attractive listings that appear to match her criteria. When her agent doesn't include one that she has found on her own she becomes suspicious that her agent is either slack or deliberately excluding listings. Both may be true. The most likely reason a listing is excluded is that the agent has seen the listing and is aware that the MLS photos are misleading and the property is not what it appears to be online. It's amazing how many of the beautiful ocean view photos in our local listings are not the view from the unit. I get scores of inquiries about amazingly low prices on units with gorgeous open ocean views. What is usually the case is that the view in the listing was shot by Spiderwoman listing agent hanging off the side balcony shooting 90 degrees to the side with a zoom lens to exclude the huge timeshare building next door. As an active market participant here, I know that but to a prospective buyer in Fresno viewing it on awesomecondos.com, it looks like a steal for $199,000.

Then there are all those already sold or under-contract listings that still show up as "for sale" on the big real estate websites. There's a reason those websites are slow to remove a sold listing. It's called advertising revenue. Do your searching at BrevardMLS.com. It's the only site you can trust to always be up to date.

Do agents show only (or favor) their own company's listings? - It's very unlikely that an agent in our market would show only her company's listings considering the very low inventory right now but I can certainly see an agent favoring her company's listings. Brokers sometimes offer additional incentives for selling an in-house listing.

Do listing agents try to get sellers to sell too cheap? - Possibly. A hungry or lazy listing agent might encourage a seller to list too low or to accept a too-low offer in the interest of getting a quicker check. More often than not, an offer the seller thinks is too-low is right in the fair market value range. A good agent will always encourage a seller to accept a fair  offer even if the seller thinks it's too low. Sellers almost always expect to get more than their property is worth.

Won't "For Sale By Owners" net more money than sellers using a listing agent? - Sometimes, but for reasons one might not expect. A FSBO will not be paying a listing commission although they sometimes are willing to pay a buyer's broker. What is definite is that they are not planning on giving the commission savings to the buyer. They didn't forgo the convenience of having a listing agent in order to give a buyer a better deal. No, sir. The intention is to pocket more money. That same mentality is why so many FSBOs are overpriced. Match those sellers with a buyer enamored with the idea of buying without a Realtor and you have a recipe for an above fair value sale. Buyers, do your homework. It's not about the commission. It's about the final price. 

If a seller cancels a listing, do they pay a fee? - Sometimes but usually they shouldn't. A listing that requires expensive marketing and effort should carry some sort of cancellation fee to recoup expenses in the event that a seller prematurely ends the listing. Most listings should not carry a cancellation fee. A seller who doesn't like her listing broker should be able in most cases to cancel the listing with no penalty. This is not a popular opinion in the business but it is mine. Make sure you know if your listing contains a cancellation fee before you sign.

Are real estate websites a good way to find an agent? - Sorry, no. Agent reviews on all of the big online real estate sites are suspect. They are predominately and suspiciously positive. Beyond the reviews, any agent can throw money at these sites and establish a big presence. Big online presence does not guarantee competence or performance. This is doubly true for an agent's own website. If you're looking for an agent to represent you as a buyer or to list your property, talk to a few. Lacking a recommendation from someone you know, your gut perception is your best tool for selecting an agent to represent you. A little skepticism will serve well. We're not all crooks regardless of public perception.

Charlie don't surf. We really think he should. __The Clash

Saturday, November 02, 2013

Sold Condo Price Ranges

Price ranges of sold oceanfront condos in the last two months:
Side view and partial ocean view units have been selling mostly in a range from $150 to $205 per square foot with the average at $170/sf. The higher range has been represented by units in buildings in good repair and/or remodeled interiors. Side ocean view units bringing above the average were in buildings including Artesia, Stonewood, Windward East, Royale Towers and Sandcastles.

Direct ocean units above the ground floor with unobstructed views have sold in a range of $196 to $281 per square foot with an average of $235 per foot. I did not include in the average the two highest sales at the Meridian which sold for $313 per square foot and the low which was a 1/1 at Triton Arms downtown Cocoa Beach with no garage that closed for $172 a foot. Like the side view units, units in well-maintained and/or newer buildings commanded the higher end of the range. Those included Michelina, Meridian and Solana Shores.

These averages and ranges are a good starting point for trying to put a fair value on a unit but they can't be definitive because of the many variables among the sold units. For those looking to buy or sell, it makes sense to be realistic about all the conditions affecting valuation. An otherwise identical unit that is not remodeled can't be expected to fetch the same price as the neighbor's remodeled unit. Garages, contents, age of appliances and AC systems, quality of view, existence of shutters, etc. all affect value and should be taken into consideration.

For units yet to be sold/purchased, there are constants, however. In almost all instances, sellers will expect their unit to command top of the range or beyond regardless of condition. This is especially true at present as prices have been moving up. Buyers on the other hand will be seeking to pay at the bottom end of the range or below, again, regardless of condition. When offering, including well-researched comparable sales with adjustments for variables, will go a long way towards bridging the gap between the opposing desires. Throwing a lowball offer without good justification is a waste of time. Likewise, a listing asking 20% above recent comparable sales better have some believable rationale if they expect to sell. If you're buying or selling, do your homework and be prepared to prove the case for your number. The comps are available for everyone. As I've said before, the Property Appraiser's and Zillow's estimates of value are not to be take seriously.

Somehow, even with our depleted inventory and abundance of unrealistic sellers, 50 condos and townhomes closed in the month of October in Cocoa Beach and Cape Canaveral. There are 282 units for sale this morning with 9% of the total distressed (short or foreclosed). We look to easily exceed last year's record sales of 612 units making 2013 the biggest year for number of sales since 2005. I'm not sure what next year will bring but I think it's safe to say that prices will be higher and inventory will continue to be in short supply. New mortgage rules and flood insurance uncertainty will both impact buyers hoping to finance a purchase. Cash will almost certainly continue to dominate the closed sales.

"My definition of art used to be narrow. Now, I consider anything that conveys intent to be art. It's a wide open door, I feel no anger towards stuff that's obscure. There's far too much effort put into things that are downright backwards and evil to harbor any ill will toward artists." unknown Redditor

Monday, October 28, 2013

Market Follow-up

I thought I'd follow up the previous post with a little more detail about the current state of the Cocoa Beach housing market including details about the year to date stats. As of this morning, October 28, 2013, a total of 577 condos and townhomes have closed in Cocoa Beach and Cape Canaveral year to date according to our MLS. As always, because we enjoy the company of a good number of slack listing agents, the actual number is almost certainly higher. Of those sales reported, 59% or 343 units, closed for cash. That trend remains in place so far in October. Of the closed sales so far in 2013, 23% were either short sales or foreclosures. That ratio has been steadily dropping since we peaked in 2010 with over half of all sales that year distressed. Current inventory is only 9% distressed.

The for sale inventory is not exactly what it seems at first glance. The number of units for sale has increased to 275 but that includes 24 units not yet built. Those unbuilt include 16 in a proposed Puerto del Rio building on the river in Cape Canaveral ($299K to $399K) and 8 at Cocoa Cabanas ($699K to $899K) on the ocean in south Cocoa Beach. The market may have recovered enough to get one or both of these buildings out of the ground. Of the inventory in existing units, 97 have been for sale for over 6 months with no takers. That suggests unrealistic price expectations. Exclude those over-priced units and the units not yet built and we're left with 154 total units that are available for a buyer looking in our two cities. Filter that small number with individual buyer criteria and the task of finding a suitable unit becomes daunting.

In a purely anecdotal observation, we feel to have returned to our seasonal cycle (slow fall, busy spring) that was upended during the crash and years following. If that is the case, we should expect to see a decent number of new listings after the holidays. I certainly hope so. In the meantime, air temps this week have been in the 70s and 80s with clear blue skies and the surf temp is holding right at 80 degrees. Spanish mackerel are abundant in the surf blasting the billions of glass minnows. Tie on a small diamond jig or similar small lure and a surf fisherman can catch as many as his heart desires. See you on the beach.

"You know, music really isn't supposed to be perfect."  ___Tom Petty

Sunday, October 20, 2013

State of the Market Oct 2013

As we approach the end of another record setting year for property sales in Cocoa Beach and Cape Canaveral we find ourselves at an interesting point in the recovery. At the peak of the boom in 2005, 805 condos closed in our two cities. Just three years later the number of property sales bottomed with only 371 condo sales that year. Prices continued to decline through 2009 and 2010 for most market segments and neighborhoods even as the number of sales was increasing. We saw 612 condos close last year and are already at 561 so far in 2013.

The price decline began slowing around 2011 for most properties and prices have been steadily inching upwards since. This is due in large part to the steadily decreasing number of available foreclosures and short sales. Of the 612 closed condos last year just over a quarter were either foreclosures or short sales. Compare that to the 25 total foreclosures and short sales available this morning in Cocoa Beach and Cape Canaveral.

Our condo inventory for sale has been hovering between 250 to 270 units since the middle of the summer. That's half what we had as recently as 2010. This hyper-low inventory means that there are not enough priced-right listings for the interested buyers. A big part of this is the large percentage of the properties for sale that are wildly overpriced. Many of the new listings are sellers who were waiting for the market to turn around before putting theirs up for sale. The market has definitely turned and is heading up but not nearly at a rate to justify the prices I'm seeing. The current scenario is unlikely to give many of these sellers their dream  prices.

For those of you looking to buy, now more than ever, you need to know what represents a fair price for the property you're looking for. Accept that you are not going to be able to purchase for last year's prices in most cases but be informed enough to be able to recognize the crazy over-priced listings. No need to get angry at the sellers who have unrealistic expectations. They are not trying to rip you off. They are just misinformed and in need of a reality check. Sellers, please have your agent do a current comparative market analysis for your property and price it accordingly IF you really want to sell. We expect you to price it above what you're hoping to get because you know that the buyer is going to expect to get it for less than asking. That's all part of the game. Buyers, forget the average selling price to last asking price ratio. Just because the average sold condo in September sold for 92% of last asking price doesn't mean that the one you want should sell for that price. You're not buying an average. You are buying one property and you should know what it's worth and what you are willing to pay to own it. Knowledge, it's not just for nerds

Cipolla's second fundamental law of stupidity:
2. The probability that a certain person (will) be stupid is independent of any other characteristic of that person..

Saturday, October 12, 2013

October So Far

I had to repost the pic of the flowering Spanish Bayonet in my backyard. The speed at which the flower spike is growing is incredible. It's averaging around a foot a day.

The number of property sales in September in Cocoa Beach and Cape Canaveral was less than in any of the summer months but still exceeded any September since 2005. There were 49 closed condos and 6 single family homes. October has begun slower yet with only 13 closed condos and townhomes recorded as of this morning. Sales have ranged from $240,000 for a top floor south ocean view Sandcastles furnished 2/2 with garage to $66,000 for a small Cape Canaveral townhome. Listing inventory remains at a severely depleted level and decent properties that are priced right are scarce. Buyers in this environment must be patient and expect competition for the good new listings.

As usual in October, our streets and restaurants are pleasantly uncrowded and the air temps have cooled below the 90s. The water temp in the surf is still in the low 80s and we've enjoyed a persistent small swell for weeks. A few advance scouts for the gathering hoards of snowbirds north of the Mason-Dixon have been spotted although the full invasion is still a couple months off. It's a good time to be in Cocoa Beach.

"Non-stupid people always underestimate the damaging power of stupid individuals." ____Carlo Cipolla

Tuesday, October 01, 2013

Closing Costs Myths & Realities

Closing costs. Who pays what? Can a seller have the buyer pay some of their closings costs? Vice versa? Closing costs may be divided differently in other states so I am addressing typical divisions in Florida only.  Most costs can be shifted from one party to the other through contract agreement as long as the lender will allow it. Lenders usually will not allow buyer costs like pre-paids and escrows to be paid by the seller. Writing it into the contract will not change this. Lenders need to be consulted before adding seller paid costs to a contract. If the Realtor agrees to pay something, it will not show up on the settlement statement.

In a typical Florida residential sale for cash, the seller will pay the following:
  • Owner's title policy
  • Doc stamps on the deed ($7 per $1000 of sales price)
  • Courier fees if a mail-away to the seller
  • Settlement fee of around $300 to closing agent (usually the title company)
  • Real estate commission for both seller's and buyer's broker *more on this below
  • Taxes prorated to day of closing
  • And, of course, payoff of existing mortgages.
The buyer will be responsible for the following:
  • Recording fees for deed, usually around $10
  • Transfer fees to homeowner's or condominium association (usually $50 to $100)
The buyer will also have already paid for inspections and insurance but these aren't closing costs. Cash buyers don't usually pay a settlement fee but a few title companies and attorney's offices try to slip in a $200 to $300 fee in hopes it won't be questioned. It will usually disappear if contested by the buyer or his agent prior to closing.

If the buyer is financing the sale with a mortgage there are a few other costs. Those include:
  • Recording fees for mortgage, around $50
  • Doc stamps on mortgage ($3.50 per $1000 of mortgage amount)
  • Intangible tax on mortgage ($2 per $1000 of mortgage amount)
  • Prepaid insurance for a year and some prepaid taxes (if included in payments)
  • Lender fees (usually 1% to 3%)
  • Settlement fee to title company (usually around $200 to $300)
It is not customary for the principals to use attorneys in our state although they may if they are so inclined. The title company typically handles all aspects of the closing after the contract is executed. In a foreclosure sale, the bank may require the buyer to pay the doc stamps and/or the owner's title policy. Be sure to factor this in (if it applies) if offering on a foreclosure.

*About the seller paying both brokers. People often assume that both brokers are working for the seller since the seller is paying both. That is not true. The seller pays their listing broker who then offers a split to the buyer's broker. The buyer's broker is working for their client who pays them nothing directly unless by prior arrangement. Sometimes with unlisted properties, the buyer may agree to pay their broker. This brings up another misunderstanding. Buyers often assume that a FSBO can be purchased for less than a listed property since no commission is being paid. Often, the exact opposite is true. Sellers go "for sale by owner" for one reason; to net more money. They usually overprice their property and they plan for that saved commission to go into their pocket, not the buyer's. A seller's motivation to go it alone never involves a thought of giving the buyer a better deal.

"You are not entitled to your opinion. You are entitled to your informed opinion. No one is entitled to be ignorant."  _____________Harlan Ellison

Tuesday, September 17, 2013

Curly Tailed Property Managers

Yesterday, from my 2nd floor office window, I watched a curly tail lizard chase a squirrel ten times his size up the wall of the neighboring building. The squirrel and the lizard locked in a stare-down until the squirrel realized he was much bigger and jumped back to the ground. The lizard immediately charged and the squirrel freaked out. With this strange adversary underfoot, the squirrel began bouncing like a gazelle while the lizard darted back and forth underneath trying to get a mouthful every time the squirrel touched down. The squirrel eventually escaped undamaged except for a brand new phobia and the lizard strutted back into the parking lot. He is patrolling as I write this. That's him pictured.

Condo owners, you too may have a feisty little adversary hiding in the shadows waiting to attack when you try to sell or lease your unit. That human curly tail might be disguised as the condo association's property manager. Most associations have an approval process for tenants which is often handled by the management company. When a unit is sold, an estoppel letter, copies of insurance policies and other documentation is required. These, too, are often provided by the management company. Some management companies are helpful partners in the selling or renting process but they can sometimes be a frustrating impediment.

I've run into bad property managers twice in the last couple of months. First was when a client tried to lease his unit and the condo's property manager made crazy, illogical attempts to block the lease. I found out that she has a well-earned reputation for being difficult. I will be warning potential buyers in this complex about the problems they may face if they think they want to own there.

I ran into the same property manager last week when a client was closing on a luxury oceanfront condo in Cocoa Beach. The buyer's lender required some insurance documentation and was referred to the manager for it. Ms. Happy blew up on the processor and refused to produce the documents in a rather flamboyant manner. The loan officer described her as "bitchy" and asked for my help. Unlike the squirrel, I chose to remain perched safely out of her reach and made calls to a Board member to see if I could round up the docs without her involvement. He was happy to hand over the required documents and the sale closed. Had I been unable to contact a Board member, the unit would not have closed. I'm guessing/hoping someone's contract might not be renewed.

It would be prudent for all condo owners to pay attention to feedback from agents and fellow owners about experiences with the management company or even to do an anonymous request for documents. Boards and unit owners are often unaware of their manager's manner of responding to requests from lenders and buyer's agents. I'm guessing that most owners in the two complexes I've mentioned would be outraged to know how their manager is working against them. Association managers do more than handle meetings, enforce restrictions, collect assessments, reports and maintenance. If their people skills are bad, their great skills at the other stuff doesn't matter. There are too many helpful, professional property/association mangers good at all aspects of the job to put up with one who is sometimes working against the owners' best interests. For the record, so no innocent association manager is suspected, this bad one is not in Cocoa Beach or Cape Canaveral.

"Reality is one honey badger. It don’t care. About you, about your thoughts, about your needs, about your beliefs. You can reject reality and substitute your own, but reality will roll on, eventually crushing you even as you refuse to dodge it. The best you can hope for is to play by reality’s rules and use them to your benefit."
_____Mark Crislip

Thursday, September 12, 2013

Revisiting Zillow

The Brevard County Property Appraiser is giving some property owners in Cocoa Beach a huge discount on their property tax. Yesterday I began one of my periodic checks of Zillow and the Property Appraiser to gauge the accuracy of their estimated market values compared to actual selling prices of recently sold Cocoa Beach properties. In past exercises both Zillow and the PA were wildly off in their estimates. This time around Zillow performed better but the Property Appraiser was still way off.

First Zillow. To start my comparison I printed the first page of recently recorded condo sales over $50,000 in Cocoa Beach from the Property Appraiser's site. Of those 25 sales, I chose not to include ten because of type of transfer or suspicious prices. I then searched Zillow for those 15 remaining sales and was able to find ten. Of those ten, Zillow's estimated value was within 13% of selling price on the date of the sale for all. That's much better than their performance when I checked in October of last year. Selling prices of four properties on last year's list were from 20% to 99% higher than the Zestimate.

Does the improved accuracy make Zillow a useful tool for buyers or sellers? Not really. Of the ten recent sales, six sold for more than the Zestimate and four for less. A buyer or seller looking at the Zestimate has no way of knowing where it lands within the deviation. Our list of ten included one that had an estimated value 13% higher than selling price and one that was 17% below actual selling price. To be fair, property sellers' guesses of fair value are usually worse than Zillow but at least they are consistently on the high side.

Now to the Property Appraiser and the great deals that office is giving property owners. Of the 15 recent sales that I used, the PA's market value averaged just 73% of the selling price with a couple under 60%. Even some non-homesteaded owners were enjoying tax discounts in the year of sale of as much as $2500. There is a possibility that some buyers, depending on date of closing, may be able to lock in an "assessed value" at the highly discounted number. If they do and homestead the property, the Property Appraiser will be limited to annual increases of value of 3% or less. Homesteaded properties in Florida can only have their "assessed value" increase by the lower of 3% or the CPI rate for the previous year. In the last ten years the CPI has exceeded 3% only four times. The PA's approach with market value according to their mandate is to estimate "the most probable price which the property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and neither being under duress to act, and represents the estimated net proceeds to the seller." This means the "market value" should be a number reflecting what a seller will walk away with after selling expenses not including paying off any debt.

This discrepancy in valuations will likely correct over the next couple of years. At any rate, for now, Hooray for our side and for owners who are benefiting from the glitch. There may be a few owners of under-valued second home properties who are ready to move and in a position to transfer their homestead and take advantage of the situation.

"A man who says he is willing to meet you halfway is usually a poor judge of distance." ____Unknown

Saturday, August 31, 2013

The Last Hoorah

The roads into Cocoa Beach are jammed this morning with beachgoers arriving for the last official holiday weekend of summer. The NKF Rich Salick Pro/Am Surf Festival  is under way at the Cocoa Beach Pier which should help keep a large part of the crowds away from the downtown beaches and further south. As always, in south Cocoa Beach even a holiday weekend doesn't make for crowded beaches. Our secret? Zero public parking. Being out of the city limits, there are no parking spots for day trippers. The ocean is calm and loaded with bait pods close to the beach and the bigger fish that follow and feed on them. Those giant explosions around the bait pods are big tarpon, kingfish, snook and sharks. On another topic, the space station has been extraordinarily bright in the sky this week as it passed about 258 miles overhead at 17,100 MPH in the early evening.

August property sales jumped in the last week of the month with 56 MLS condo sales recorded so far in the month in Cocoa Beach and Cape Canaveral. Fourteen sales were for $300,000 or more. Interestingly the three highest priced units were riverfront not oceanfront. Eleven units sold for less than $100,000. Twelve of the 56 were either short sales or foreclosures. In Cape Canaveral in one complex, a foreclosure and a short sale unit closed one day apart. Identical floor plans, the short sale in good condition, the foreclosure needing work. The foreclosure unit was listed for $39,999 but sold for $55,800 after multiple offers pushed the price up. The much nicer short sale unit closed for full asking price, $48,500.

A short sale direct ocean corner with 2700 square feet in the troubled Almar building in south Cocoa Beach closed for $370,000 as a short sale. It sold new in 2006 for $760,000.

The smoking deal of the month has to go to the brave soul who purchased a five year old direct river unit at Garden by the Sea in south Cocoa Beach for $275,000. Three bedrooms, three baths, three half baths, 2405 square feet and a 2 car garage. The majority of the nine units are held by only two parties hence the "brave" part of that comment.

There are 251 condo units and 58 single family homes currently for sale in our two cities. Ten percent of those are distressed, either short sales or foreclosures. In 2013 we are well ahead of every one of the last eight years in number of properties sold through August. With inventory at such a low level I don't see how this can continue for much longer. Maybe the increasing prices will encourage more owners to put their properties on the market.

Enjoy your Labor Day weekend, drive carefully and check your feet for tar when you come off the beach. A little baby oil and a paper towel will get it right off. It's much more difficult to remove after it's been ground into the carpet in a car.

Procedure for engine failure during flight
note: this may not apply to ejection-equipped aircraft or to parachute-wearing pilots

Saturday, August 17, 2013

Dog Days on Fire

Since I wrote the last post about July sales, four more sales of condos have recorded which makes the 70 units sold in July 2013 the biggest July for condo sales in Cocoa Beach and Cape Canaveral since 2004. More July sales than the peak years of 2005 and 2006. That's shocking considering that we have about 900 less units for sale than in those years. Go figure.

So far in August another 29 units have closed as of this morning. The highest price paid was $750,000 for a 5 year old direct river penthouse corner 4/4 with 4299 square feet at the West End building behind the Sunset Grill.

A south facing 4th floor Michelina 3/3.5 with 2325 square feet closed for $425,000.

A north ocean view tastefully remodeled 4th floor Ocean Oaks 2/2 in Cape Canaveral with 1723 square feet and a one car garage closed for $390,000.

A fully furnished 3rd floor direct ocean Emerald Seas 2/2 with 1602 square feet and a one car garage sold for $326,000.

Another developer-owned Magnolia Bay 2nd floor, 3/3 with 2183 square feet and a one car garage closed for $325,000.

A 4th floor direct ocean partially updated and good condition Sand Dollar 2/2 with 1394 square feet in Windward East with a one car garage closed for $300,000.

In Hacienda del Mar in south Cocoa Beach a furnished 2nd floor direct ocean 2/2 in original condition with 1273 square feet and a one car garage sold for $280,000.

The smoking deal of the month was in the Garden by the Sea direct river building in south Cocoa Beach. This six year old 2nd floor 3/3.5 corner unit had 2405 square feet and a two car garage. It closed for $275,000. That killer price came with a bit of risk as the majority of the units in the building are still unsold.

A remodeled and fully furnished 2 bed, 2.5 bath townhome with 1151 square feet  in the newer section of Villages of Seaport with no garage closed for $235,000.

Another 8 year old Bayside in Cape Canaveral closed for $230,000. This one was a 5th floor 3 bedroom 2.5 bath with 2032 square feet and a one car garage.

A foreclosed direct river 3rd floor Solana on the River 2 bed, 2 bath with 2055 square feet sold for $230,000.

A fully furnished, direct ocean weekly rental 1st floor Chateau by the Sea 2 bed, 2 bath with open parking in original condition closed for $219,000. It has 910 square feet.

Two villas at Bayport of Cape Canaveral closed for $218,000 and $220,000. One was 3 bed, 2.5 bath and the other 4 bed, 3.5 bath. Both had 2 car garages.

A three level direct ocean penthouse Sunrise Tower 2 bed, 2 bath with 1457 square feet and a one car garage sold for $190,000. It needed work.

A ground floor nicely remodeled and fully furnished canalfront Beachwalk 2/2 with 1014 square feet in Cocoa Beach closed for $185,000. It has a one car garage and a deeded boat slip

Another of the bank-owned Pier Resort 3/3 (3rd floor) units has closed. Like most of the others, it has 1900 square feet and a one car garage. Closed for $169,100.

A 1st floor foreclosed direct ocean Canaveral Sands 2/2 sold for $165,000. One car garage and 1222 square feet.

One of the Diplomat 2 bed, 1 bath units sold for $120,000. Open parking, 750 square feet and original condition.

A 5th floor south facing unit in the north Twin Towers building closed for $115,000. Two bed, 2.5 baths in original condition with a carport.

A 900 square foot direct river 1st floor Fountain Cove 1/1 in original but nice condition with a garage sold furnished for $112,000.

A non-waterfront Four Seasons 2nd floor 2/2 with garage sold for $110,000.

A ground floor direct river Seminole Landings 3/2 with 1498 square feet sold as a short sale for $105,000. Don't get too disappointed at missing this one. Was moldy and needed a lot of work.

Two 2nd floor Dolphin Beach updated 1/1 units with a view of the ocean sold for $70,000 and $68,500. Open parking and 735 square feet. The lower priced unit sold furnished.

A ground floor Roosevelt Gardens 2/1 with 671 square feet and open parking sold for $42,500. Needed work.

Two other small Cape 1/1 units sold for $41,900 and $29,500.

I've long been advising buyers who are buying property here to use a local lender, especially for condos. A recent experience with one of the "region"al banks in our county has spurred me to qualify that advice. Just choosing a local lender does not guarantee a good experience. You might be unlucky enough to get a bad loan officer at a good bank. There are incompetent loan officers walking among us and they look just like the good ones at first glance. Ask someone for a recommendation based on a positive experience before you choose your lender and loan officer. Even with a good recommendation, it is prudent to maintain constant contact with the lender and to demand constant status reports. Sometimes the explosion happens before anyone notices the sizzling fuse.

On a positive note, the fishing right off the beach is on fire. Tarpon, snook, kingfish and other big predators are shadowing the plentiful bait pods up and down the beach.Conditions are such that they are easily caught from a small boat out of Port Canaveral or a kayak off the beach. A friend caught two sailfish in 40 feet of water off Cocoa Beach last Saturday.

"I know there are other errors but unless I'm being graded or paid I'm not trying to be perfect." ___CMO_Ratchet

Saturday, August 03, 2013

Sizzling July

I'm more than a little surprised at the number of MLS-listed condos and townhomes that closed in the month of July in Cocoa Beach and Cape Canaveral. With a record low number of units for sale, somehow, 66 units were picked off and closed in the month. Our inventory now stands at 245 existing units actively for sale in the two cities with another 17 optimistically being offered in buildings that are but drawings on paper and dreams in the minds of the developers. At the offering prices of units in these two buildings, it seems unlikely that construction will begin anytime soon. I could be wrong.

Anyone hoping to pick up a deal on a short sale or foreclosure direct ocean condo has a grand total of three from which to chose. Two of those are unlikely to attract much attention in the condition and building they're in. Again, I could be wrong. There are 33 total short sales and foreclosure condos for sale right now.

Interest in attractively-priced new listings remains high and good units are under contract usually within a few days. Multiple offers are still common. The brouhaha over the new MLS has subsided somewhat as the crybabies have cried themselves out and realized that the new system is actually a great improvement over the old one. There are still some glitches as the data are migrated and criteria are tweaked to our needs but overall, I'm liking the change. The login for the public is now BrevardMLS.com so get rid of your old link if you have one saved and give the new system a try if you haven't already.

Weather has been typical for mid-summer except for a few cool days last week. This morning Tropical Depression Dorian is sitting directly off our coast and predicted to move east into the Atlantic bringing us nothing more than rain and cooler temps. I'll take it. If anyone needs help with the new MLS or a bulldog to represent their best interests in making an offer, I'm here to help. Larry@southcocoabeach.com

"Just goes to show that the ability to be a complete moron who eats confirmation bias for breakfast has no fixed place on the political spectrum." anonymous

Saturday, July 27, 2013

Change Has Come

That loud whining sound in the air this last week was the sound of hundreds of distraught Realtors in Brevard County moaning and complaining about our powerful new MLS system. The majority, however, have embraced the new system and are working through the transition despite having to learn new software on the fly while conducting normal business. It has been challenging. Consumers going to BrevardMLS.com will now be directed into the new system. Don't despair on the first visit. It's fairly intuitive but if anyone has questions I'll do my best to assist. One powerful new feature is a custom portal into the MLS where favorite listings and searches can be saved. If anyone would like one, send me an email Larry@southcocoabeach.com and I'll set it up for you.

Our stats aren't quite as reliable this first week as many listing agents are still trying to figure out how to add and close listings so I'll report on what is showing this morning. According to FlexMLS we have had a total of 47 closed condos and townhomes in Cocoa Beach and Cape Canaveral so far in July 2013. Six sold for less than $100,000 and seven closed for more than $300,000. The two highest sales so far were both at the Meridian oceanfront in Cocoa Beach. These 2072 square foot 3/3 units closed for $650,000 and $575,000.

Two of the 47 were short sales. One was a 3/2 villa with 1507 square feet and 2 car garage at Bayport Cape Canaveral that sold for $205,000. The other was a lakefront Harbor Isles 2/2 in south Cocoa Beach that sold for $130,000.

Seven of the sales were bank-owned. They included;
A 2nd floor 3/2 direct ocean Coral Sands w/garage in south Cocoa Beach for $270,000.
A 2nd floor Pier Resort 3/3 with 1900 square feet and garage for $175,000.
An Ocean Woods Cape Canaveral 2/2 with open parking for $115,000.
A 2nd floor north bldg. Twin Towers 2 bed 1.5 bath w/carport for $104,900.
A 4th floor 900 sf Fountain Cove 1/1 w/garage for $92,000.
A 2nd floor Cape Shores 2/2 with 1091 sf and open parking for $79,900.
A Ridgeview 2/1 w/carport and 756 sf on south Brevard Ave. Cocoa Beach for $53,900.

Our inventory is at an all-time low with a total of 250 active for sale condos in Cocoa Beach and Cape Canaveral showing right now, 24 of those distressed. There may be a few new listings that haven't shown up yet as listing agents are struggling trying to figure out the new system but the trend before the change-over was shrinking numbers so I suspect that the real number is no more than 260. Compare this to almost 1200 listings in late 2006 and early 2007. Construction activity of single family homes is active right now in Cocoa Beach with several new homes slated to start shortly in addition to those currently being built.

Lobster mini-season this past week was successful with some of the biggest shallow water bugs caught in recent years. Those pictured were caught from a beach dive in Indian River County. Tarpon and other big predators are thick around the huge pogie schools off Cocoa Beach right now. They are easily reached by small boats from the Port or by kayakers from the beach in our calm summer ocean conditions. Remember the sunscreen and stay hydrated. Tropical Storm Dorian is approaching from the east but not expected to bring much impact to us. That could change.

"Why would I lay up now that I'm rich? I didn't do that when I was poor." __Angel Cabrera

Tuesday, July 16, 2013

Better Best and Highest

The seemingly missing comma in the title is not an error. Read the last part of this post and it will become clearer.

Halfway through July and property sales in Cocoa Beach and Cape Canaveral are ticking along at a heated rate. Of the 26 reported closed condos and townhomes so far in the month two went for more than a half million, both at Michelina, $600,000 and $575,000. Another high sale was a 2nd floor northeast corner at Villa Verde in the same stack as the collapsed 4th floor balcony in April. It has 3 bedrooms 3.5 baths, 2512 square feet, 2 car garage and closed for $395,000.

Shorewood in Cape Canaveral has been active with three closed sales of non-direct units at prices between $202,000 and $245,000.

One of the last bank-owned Pier Resort units closed for $170,000. Side peek of the ocean with three bedrooms, three baths and 1900 square feet.

A 2nd floor Diplomat 2/1, 750 sf with mild updating sold furnished for $116,000.

Two Bayport villas in Cape Canaveral closed for $205,000 and $240,000, 1507 and 1686 square feet.

A 2nd floor Royale Towers south facing C building 2/2 closed for $202,000.

The highest closing price since 2005 at Beachwalk on the grand canal on Banana River Drive in Cocoa Beach happened this month. A 2nd floor 2/2 closed for $190,000. It had a boat slip with lift and a garage. Several direct water units similar to this have sold for under $150,000 in the last three years. A ground floor direct with boat lift closed in January this year for $128,500. This same story is being repeated at most complexes as prices are ratcheting up with the evaporation of distressed inventory.

Let's revisit multiple offers. I had an interesting encounter with a buyer last week who thought multiple offers should include multiple chances to do "best and highest". It doesn't work that way. Typically in our market, if more than one offer is received at the same time, the listing agent will go back to all buyers' agents and give them the opportunity to bring their best and highest offer to be presented to the seller at the same time. This is risky for the seller as the pervasive distrust of real estate agents means that they run the risk of losing one or all of the buyers. I was involved in one situation where both buyers withdrew their offer when asked to bring their best and highest. The condo ultimately sold to an entirely different person for less than at least one of the first buyers was willing to pay. If your buyer's agent tells you that the listing agent has called for "best and highest" because there are multiple offers, you have three choices.
  1. keep your offer exactly the same in hopes of being the winning offer
  2. increase your price and/or better your terms in hopes of being the winning offer
  3. withdraw your offer because you "don't play games' or believe the agent/s are lying to you
The seller also has choices of how they want to handle the multiple offers once received.
  1. They can accept the offer they like best and proceed to closing. Note that the best offer may not necessarily be the highest. Closing date and terms may win out over price.
  2. They can choose not to respond to any of the offers if none are good enough.
  3. They can counter one or several of the offers. If none of the prices are acceptable to them they can offer the same counter-price to all and accept the first one (if any) to respond. Or, if one is clearly better than the others, they may choose to counter that one alone with a change of price and/or terms.
How a buyer responds when asked for his best and highest offer is entirely his decision. How a seller responds to the offers she receives is entirely her decision. The buyer I mentioned who was upset with the process was bothered that he didn't get a second chance to better his "best and highest" when someone else made a more attractive offer. The seller chose to negotiate with the offer that she preferred. That offer was apparently good enough that she saw no upside to re-approaching the lesser offer. It was her decision to make. Also note that in the event of multiple offers, a seller doesn't have to call for best and highest. She has the right to choose the offer she likes best without giving anyone a chance to do best and highest.

At this stage of our market, multiple offers are the name of the game for any priced-right listing so be prepared for this if you're offering and don't let it deter you from participation. You decide what price and terms you're comfortable with and then hope for the best. You might win just by staying in the game without changing the offer at all. If you don't trust your agent enough to be honest with him, find another one.

"All journalism is advocacy journalism. No matter how it's presented,
every report by every reporter advances someone's point of view."
_______Matt Taibbi

Larry Walker - larry@southcocoabeach.com  - 321.917.5786

Friday, July 05, 2013

How Not to Sell a Condo

Those who've read this blog for any length of time know from my dozens of tales of misbehavior that a good listing agent is more than a Glamor Shot and a snazzy blazer. As a buyer's agent I find myself across the table from plenty of very competent and able listing agents, some of them many times every year. I appreciate them making my job enjoyable and as snag-free as the system will allow. Unfortunately, I am sometimes forced to deal with listing agents who occupy a much lower position on the competency scale.

A listing agent is employed by property owners to sell property. Once hired, if the listing agent is not doing her job well, there is not a good way for the seller to know that. If there's a sign in the yard and the listing is on the internet she's doing her job. Right? Maybe not. No offers? Maybe the market is just not interested in your property OR, maybe, the agent doesn't answer her phone or respond to messages or emails. No showings? Same answer. How's a seller to know? Here's a timeline of a recent encounter with a slacker of a listing agent whose listing my client tried to purchase. Note that often sellers may be hard to reach and responses can take days. Good listing agents will relay the reason for the delay and try to keep the prospective buyer's agent informed along the way in hopes of eventually putting a deal together. That didn't happen this time. This is how NOT to handle an offer.

June 15 - mid-morning - I call the listing agent of a half-million dollar oceanfront condo to ask some questions about her listing. My clients who I've shown the unit to twice are interested in making an offer. The recently sold comparable units don't support the asking price so I'm making the call to discuss the unit and find out if there are non-public comps or details about the unit that would justify the higher asking price. She doesn't answer and I leave a message. There is still no call-back by late afternoon so we go ahead and prepare an offer based on our research of the nearby, recently sold units of similar size and condition. The comps suggest a price of about 90% of the asking and we offer accordingly. I email the offer to her and ask for confirmation of receipt.

June 16 - early morning - I have received no call-back or email so I email again asking if she has received the offer. Living here in the home of manned space flight, the practice of redundancy is firmly ingrained in most of us so I fax another copy to her office, just in case. No response so I call again at 9:30 and leave a message that I had emailed and faxed the offer. She calls late afternoon to confirm her receipt and said she'd present our offer to the seller that night and get back to me.

June 17 - no communication from agent

June 18 - she calls and apologizes for the delay and says she will get the offer to the seller "today". I don't mention that she told me two days ago that she was presenting then.

June 19 - I call and ask if the seller had a response to our offer. She says she is getting with him at 9:30 AM "today" (not the other "today" as promised) and will have a response for us shortly after. Nothing from her after that.

June 20 - Still no word from the agent but I have heard about another unit not yet listed on the MLS that seems perfect for these clients. I make arrangements to see the other unit.

June 21 - I email our MIA listing agent again asking if any word. No response.

June 22 - We look at the unlisted unit, love it, make an offer and reach agreement that afternoon. No contact from the first agent about our now seven day old offer all day.

June 23 - Still no word from the listing agent.

June 24 - 11AM email from the listing agent saying the seller has countered our offer from nine days ago and encourages me to have my clients respond to his counter. I let her know that we have another unit under contract and thank her for her tireless efforts.

Think this is uncommon? Think again. Choose your listing agent carefully. For the record, so no innocent Cocoa Beach listing agents are suspected, this was an agent from further south who has no listings in our two cities, thankfully. Oh, and for the sellers of the three Cocoa Beach and Cape Canaveral condos this morning that are listed by Orlando brokers and appear only in the Orlando MLS and not on the local MLS, good luck finding a buyer. Most of the local buyer's agents aren't even aware that your units are for sale.

Well I guess it ain't easy doing nothing at all oh yeah
But hey man free rides just don't come along every day
____The Offspring

Sunday, June 30, 2013

Hands Up and Kick the Checkbook Over Slowly

A one-week move of over a half percentage point in mortgage rates caught everyone's attention this week, especially prospective mortgage borrowers. Freddie Mac reported that the average 30 year fixed rate mortgage increased from 3.93% to 4.46% between June 20 and June 27. That's on top of a similar increase already pressuring mortgage applicants since May 2 when the average rate was 3.35%. In the real world that translates to a monthly payment today for a $250,000 mortgage that's $159 higher than just seven weeks ago. A borrower getting a $250,000 mortgage at today's average rate will pay $1908.000 a year more interest than a borrower of the same amount at the average rate in early May.

Will rates continue their upward trend? No one knows but opinions are abundant. I would normally say do your homework and trust your gut but, in this case, the forces moving rates are too big and complex for a peasant like me to comprehend. Time will tell. In the meantime, inventory of condos and townhomes in Cocoa Beach and Cape Canaveral is back down to 275 total units after briefly getting to 330 units earlier in the year. Median asking price is $210,000. Distressed sales make up 9% of those 275 units with only three of the distressed units asking over $200,000.A total of 52 units (12 distressed) are recorded as having closed in June. At that rate we have but a 5.29 month supply of units for sale.

There are 59 single family homes currently for sale in our two cities with a median asking price of $350,000. Only five are distressed with the highest asking price of the five at $289,900. Nine single family homes are showing as having closed in the month of June. None were distressed.

We are firmly in our usual summer pattern of afternoon thunderstorms and calm ocean waters. Temps have not been unbearably warm and the fishing has been good. As is always the case in summertime, the Cocoa Beach Country Club golf course is wide open, uncrowded and cheap. Tee times unnecessary. We haven't had decent sized waves for a while but there has been a constant small background swell keeping the kids and longboarders satisfied. I'll see you outside. Stay hydrated and don't forget the sunscreen.

Wednesday, June 12, 2013

Short Sale Negotiators on Acid

I promised I'd share the final chapter in the crazy short sale story I began earlier this year when it finally concluded. As crazy as it was then it got even more bizarre before blowing up in spectacular fashion this week. The story of the short sale on acid is now complete and follows. I'll start back at the beginning for those who may have missed it.

The short sale one bedroom, one bath Cocoa Beach condo was first listed on April 27, 2012 for $49,999. The seller signed a contract on May 4 but that buyer backed out three weeks later. The seller signed another offer for $35,000 from my client on July 7 and the signed offer was submitted to Wells Fargo to start the short sale approval process. Wells finally approved the short sale at the $35,000 contract price with a $2000 seller contribution and release from deficiency in January this year. The contract was then submitted to the condo association for first right of refusal and an existing owner took the contract away from my client. The bank refused to transfer the approval to the new buyer and the short sale negotiations had to be restarted. At this point I suggested to the new buyer that the approved price might not happen again and if it didn't then all the other owners would lose. She was willing to take the risk for them (without asking them, of course) and would not back away and let the first buyer close.

The title company negotiating the short sale resubmitted the new contract and the bank responded in April with a new, increased approved price of $51,500 with $7000 seller contribution. The new buyer responded by upping their $35,000 to $35,100. The bank responded with a request for the buyer's highest and best offer accompanied by three recently sold comparable properties. The buyer provided comps and upped their offer to $37,000. This was April 24.

Wells Fargo responded this week with their take it or leave it offer. They now want $63,000 from the buyer and want the seller to sign a promissory note for $131, 828 payable at $1098.57 per month for 120 months. In other words, Wells Fargo today wants $157,828 more than they were willing to accept five months ago. Is anyone surprised that these guys needed bailing out because of bad decisions?

Here's the easy to read timeline:
April 27, 2012 - condo listed as short sale for $49,999
May 4, 2012 - seller signs contract for unknown amount
May 30, 2012 - buyer cancels contract and listing returns active
July 7, 2012 - 2nd buyer submits offer of $35,000 and seller signs
July 9, 2012 - short sale package is submitted to Wells Fargo
Jan. 21, 2013 - bank approves sale for $35,000 plus $2000 from seller, no deficiency
Jan. 22, 2013 - another owners declares intent to exercise first right of refusal
Feb 5, 2013 - bank refuses to transfer approval to new buyer
Feb 8, 2013 - short sale process is started over with new buyer
April 12, 2013 - bank counters at $51,5000 plus $7000 seller contribution
April 15, 2013 - buyer counters at $35,100
April 23, 2013 - bank declines counter and asks for best plus 3 supporting comps
April 24, 2013 - buyer submits best offer of $37,000
June 10, 2013 - bank counters at $63,000 plus $131, 828 promissory note from seller
June 12, 2013 - buyer declines and file is closed - foreclosure next

Current market value of this unit is around $40,000 to $45,000. I will update on the sold amount when it is eventually foreclosed and sold. Wells Fargo stock is currently rated either buy or strong buy by 18 major analysts. I'm an idiot.

"Insane in da membrane.
Crazy insane, got no brain
Insane in da brain."  ___Cypress Hill

Monday, June 10, 2013

Parsing the Trends For Summer 2013

Let's look at the dynamics of the Cocoa Beach real estate market as we begin the summer of 2013. I'm not seeing any significant shifts away from the trends that were already in place. The most powerful force in our market is the continued decline in the number of distressed sales. Of the 61 condo sales recorded in May 2013 only 16% were distressed. We began the year with 44% of all MLS closed condo sales in January 2013 either short or foreclosed. That percentage has dropped every month since. As these distressed sales have disappeared the downward pressure on prices has disappeared with them and we are seeing rising prices again in almost all complexes and neighborhoods. The sellers who were waiting for market recovery to list their property are finally getting their day although probably not as fast as they hoped. Prices aren't rising nearly fast enough. Our depleted inventory still has a large number of listings at optimistic asking prices by these hopeful sellers. That means that, after discarding the over-priced listings, buyers have very few priced-right attractive properties to consider. That dynamic has the fairly-priced, good ones moving quickly. Price a decent condition Cocoa Beach property near the fair market value and it will sell immediately.

One third of the condo sales in May were on the market for less than 32 days and half of the single family homes sold in less than 35 days. Had the other sellers been more realistic with their first asking price that number would be higher. 59% of  condo sellers had to reduce their asking prices before finding a buyer.

The number of purchases with mortgages is rising. As recently as 2010 two thirds of all condo purchases were for cash. In May we were right at 50/50 cash to mortgage for condos and about 2/3 of all single family sales were financed.

As we move through the summer months I expect these trends to continue. For sellers it means that you can reasonably expect to get more than you would have last year but not a great deal. For buyers, expect competition from other buyers for good properties and expect to pay slightly more than you would have six months ago. Thinking of throwing out a lowball on a good property hoping for a steal? Try some other market. It's not going to happen here. Get pre-approved with your local lender so you can include a pre-approval letter with your offer or have proof of funds if you offer cash. As always, good luck in your search. Questions? Email me at larry@walkerbagwell.com or call me at 321.917.5786 I'm happy to help.

Here's the tl;dr version for those with limited attention spans.

Cocoa Beach & Cape Canaveral Real Estate Trends Summer 2013
  • very low inventory
  • slowly, steadily rising prices
  • shrinking number of distressed sales
  • competittion among buyers for good properties
  • quick sales of good, priced-right properties
  • mortgages becoming more prevalent
  • successful lowball offers = DOA
"Money doesn't solve all your problems but it solves your money problems."  __James Altucher

Friday, May 31, 2013

Condo Commandos

Is your condo board of directors acting within the law? Or are they making it up as they go and potentially exposing themselves and the association to lawsuits? I can say with certainty that there is more than one board of cowboy directors in Cocoa Beach that fits in the latter category. It's not uncommon to find condo associations enforcing rules that are in contradiction to the condo docs or enforcing legitimate rules unequally. I've had a condo director tell me that he knew the pet rule he was enforcing was different than the policy spelled out in the docs but that he was doing it for the good of the owners. This same board is also rigidly enforcing occupancy limits that are in contradiction to the docs. No one has challenged so it goes on.

Can't the Board just add a rule changing the pet restrictions in the docs? How about a new rule limiting the number of units one person or entity can own? We must go to the original docs to answer that. "The authority for the board to enact a given rule or regulation must be either expressly authorized in the governing documents or Declaration of Condominium or be reasonably inferred therefrom."

If your board has adopted a new rule prohibiting pets in contradiction to the docs you are under no obligation to find a new home for Spot. The law is specific about a board's authority and the process for limiting uses and rights. Merely adding a new rule to the old rules and backdating the document does not make that rule enforceable and it might expose the directors to liability. Targeting a specific owner through such methods is doubly dangerous. Cowboy directors, if you're reading this, you are encouraged to shape up and follow the rules. If you're in an association with a renegade board, you may want to point them to this post and to this one by Jean Winters, Esq.

"If honesty is the best policy, then is dishonesty the 
second best policy?"  _____Grant Williams

Sunday, May 26, 2013

What's Selling in Cocoa Beach?

Tasty pompano from the surf in south Cocoa beach
Almost a month into sea turtle nesting season and but a few days from the beginning of the 2013 hurricane season and real estate sales appear to be slowing somewhat. The Cocoa Beach and Cape Canaveral MLS condo inventory first broke below 300 units exactly one year ago and is still hovering in the same range. The makeup of that plus or minus 300 units has changed somewhat with average prices shifting upwards as the sub-$100,000 supply has been chipped away. Of the 34 units already closed this month, only five closed for less than $100,000. Compare that to the 24 units under $100,000 that closed in May 2012. There was only one sale for more than $375,000 in May 2012. We've had four closed sales so far this month above that number with three of them at or above $500,000.

The priciest condo sale so far this month was a 4th floor SE corner unit at 3800 Ocean Beach Blvd. that closed for $520,000. This unit has 3 bedrooms, 3.5 baths and 2392 square feet. Weekly rentals are allowed in this small 6 year old complex with rents in the $2000 per week range.

Another of the $500K+ sales was one of the pie-shaped, direct river 4/4 Magnolia Bay units. This 3rd floor 3024 square foot unit with a 2 car garage sold for $510,000.

An upgraded 7 year old, 4th floor direct ocean Michelina 3/3 with 2008 square feet and one car garage sold for $500,000.

In the sub-$100 per square foot club a 6 year old, non-waterfront four story townhome with 4454 square feet  in south Cocoa Beach closed for $425,000. It has ocean and river views being in the magic narrow strip of land that is south Cocoa Beach.

One of the big 2434 square foot 3/2 Puerto del Rio units closed for $372,000. It was direct river on the 4th floor.

An east facing Mystic Vistas 4th floor 3/2 with 1686 square feet in the A building sold fully furnished for $370,000. A foreclosed 4th floor 3/2 NE corner  in the D building with an ocean view and 1994 square feet closed for $262,500.

A 3rd floor direct ocean SE corner Beach Winds Cocoa Beach with 1618 square feet sold for $367,500. It had some remodeling and a 2 car garage. In the same building a 7th floor north ocean view 3/2 with 1464 square feet and a one car garage sold fully furnished for $230,500.

A nicely updated direct ocean Driftwood 5th floor SE corner 2/2 with 1118 square feet and some furnishings sold for $268,000. No garage.

A mainly original condition 5th floor north ocean view Mark 3/2 with 1506 square feet closed for $280,000. No garage but does have a carport.

A nicely remodeled ground floor direct ocean NE corner 2/2 Windjammer of Cape Canaveral with 1196 square feet and a one car garage sold for $226,900.

A fully furnished south facing 2nd floor, 2 story Cocoa Beach Club with two bedrooms and 2.5 baths and 1176 square feet sold for $225,000. It has a peek of the ocean over the pool and a carport. Weekly rentals allowed in this complex.

A very nicely remodeled ground floor east corner C building Royale Towers 2/2 closed for $205,000. 1256 square feet and a one car garage.

A direct ocean 2nd floor, 2 story North Triton Arms 2 bedroom 1.5 bath in downtown Cocoa Beach sold for $184,000. It has 1088 square feet and a carport.

Another of the bank-owned Pier Resort units closed for $169,000. It was 2nd floor with 3 bedrooms and 3 baths. There are no more of these units available with the last three under contract yet to close.

A foreclosed 2nd floor direct Banana River Harbor Isles 2/2 with 1308 square feet and a one car garage closed for $167,000. A slightly smaller 1st floor lakefront 2/2 in the same complex sold for $135,500.Next door at River Lakes a direct river 2nd floor 2/2 with remodeled kitchen, 1244 square feet and a one car garage closed for $155,000.

A fully furnished 5th floor south ocean view 1 bedroom, 2 bath Cape Winds sold for $138,000. No garage but weekly rentals allowed.

A nicely remodeled north ocean view 4th floor Twin Towers sold fully furnished for $110,000.

Other sales included three at Costa del Sol at prices between $148,500 for a 2nd floor direct river 2/2 and $86,000 for a ground floor non-waterfront 2/2.

There were two closed short sales at Oak Park on Tin Roof in Cape Canaveral for $150,000 and $160,000. That's half the new price of these units in 2006.

During this same time a remarkable ten single family homes have closed. It's remarkable because there are only 57 left for sale in our two cities. Half of the ten were canalfront in Cocoa Beach at prices between $277,000 and $481,765.

There are 301 MLS-listed condos and townhomes for sale in the two cities this morning. Of those, 26 are either short or foreclosed. Only three of the 57 single family homes are distressed, two short sales in Cocoa Beach and a lone foreclosure in Cape Canaveral.

Turtle nesting has been active in south Cocoa Beach and several dolphin in the 50+ pound range have been landed offshore. Weather has been beautiful and we watched a magnificent rocket launch earlier this week. Overall, a good month so far in Cocoa Beach. If you haven't found your place yet and want to experience what Cocoa Beach has to offer I still have some open weeks in beach rental units this summer starting at $785 total for 7 nights.

Have a safe holiday weekend and thanks to all who have served our country.

"If you're gonna do me wrong, do it right."  ___Vern Gosdin