Weekly Wrap Up - Sunday January 29, 2017

I appreciate the positive feedback about last week's wrap-up, so, here's another.

For the week Sunday, January 22 to Sunday, January 29 there were 21 new MLS listings of  residential properties in Cocoa Beach and Cape Canaveral, slightly more than last week. Fourteen of those were condos or townhomes and seven were single-family homes. Four of the sellers priced their properties attractively and were under contract by the end of the week. Most of the others could not resist the urge to over-price. During the same week another twelve properties that had been listed prior to last Sunday went under contract. Nine properties were reported closed during the week, all but one were condos.

There are currently 219 existing condos and townhomes offered for sale in our two cities and another 28 pre-construction units. Nothing has changed with the tendency to over-price with still more than a third of the total on the market for over six months. There are 60 single-family homes on offer, 25 of them waterfront.

The strategy has not changed for those hoping to purchase. A prospective buyer who knows how to approximate fair value for their target property and is willing and able to offer when the right property becomes available stands a good chance of succeeding as long as her criteria are not too restrictive. Out of town buyers who are unwilling to offer without physically touring the property are at a severe disadvantage to those who have an agent they can trust to protect them in a quick sight-unseen offer situation. The best properties and deals rarely happen with properties that have been on the market long enough for American Airlines to deliver a buyer to Cocoa Beach.

About those restrictive criteria: With our tight inventory, some flexibility with must-haves can go a long way towards a successful purchase. A buyer looking for a condo that will allow their Labrador that has a two car garage has exactly three possibilities this morning. If they must be on the ocean, there is but one. As always, a purchaser with a buyer's agent who knows and is active in this market and understands what is working has a great advantage over those who may have selected a face from Zillow's gallery of paid agent listings.
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"The best scams are the ones that are not actually dishonest but that simply set up the mark to make decisions against their own interest."  __dbr

The Weekly Wrap - Jan. 22, 2017

I am contemplating adding a weekly or bi-weekly wrap-up like the one below into the usual mix of ramblings about agent shenanigans and misbehavior. Feedback and/or suggestions are appreciated. I'm fond of the thought of "less is more" but I've been known to take that to extremes as evidenced by a couple of month long gaps between posts in the past. Note that the data I'm reporting are totally dependent upon those entering said data, a group not known collectively as being dependable nor prompt. That means there will be some under-reporting due to listing agents who didn't get around to marking a listing as contingent or closed. That said, the picture of the overall trend is true.

For the week Sunday, January 15 to Sunday, January 22 there were 26 new MLS listings of  residential properties in Cocoa Beach and Cape Canaveral. Twenty two of those were condos or townhomes and four were single-family homes. Four of the 26 new listings were under contract in three days or less, a sign of spot-on pricing and strong demand. It must be noted that there is no level of demand that will overcome some of the extreme over-pricing that I'm seeing on a lot of properties. During the same week another 18 properties that had been listed prior to last Saturday went under contract. Only five properties were reported closed during the week.

There are currently 216 existing condos and townhomes offered for sale in our two cities and another 29 units in proposed projects yet to break ground. A third of the total have been for sale for over six months, a sure sign of over-pricing. The single-family home market is somewhat more rational with 60% of the 61 houses for sale on offer for less than three months.

I'll try to post this wrap-up every week if it looks like anyone is interested. If not, we'll go back to the random post when the wind changes direction schedule.

I enjoyed seeing a lot of you last night at the downtown Sip n Stroll event. Clear skies and temps in the mid 70s contributed to the attendance. There were 26 different stops scattered in a three block area of downtown, each offering a small splash of wine and an hors d'oeuvre to the hundreds of folks moseying about. Some stops like Twin Finnegans and Heidi's Jazz Club had lines out the door when I stopped by but I didn't hear any complaints. I missed well over half of the stops as I maintained a tight orbit around the Studios. It was fun.

“If a free society cannot help the many who are poor, it cannot save the few who are rich."
  [Inaugural Address, January 20 1961]  John F. Kennedy

A considerable share of the world's population still cannot afford comfortable housing, education and quality health care.
Read more at: https://www.brainyquote.com/quotes/authors/v/vladimir_putin_3.html

A considerable share of the world's population still cannot afford comfortable housing, education and quality health care.
Read more at: https://www.brainyquote.com/quotes/authors/v/vladimir_putin_3.html

A considerable share of the world's population still cannot afford comfortable housing, education and quality health care.
Read more at: https://www.brainyquote.com/quotes/authors/v/vladimir_putin_3.html

Bandits Are Back in Town

Beware the junk fee. It's one thing to be bested by the other party in a transaction. It happens. It is another thing altogether to be taken advantage of by one's own team. Most purchasers who are getting a mortgage scrutinize their lender's disclosures trying to figure out if there are any junk fees and, if so, where they are buried. It can be difficult with today's complicated loan disclosures. Sellers are rarely concerned with the borrower's loan fees but the lender may not be the only shark in the tank.

In most Florida residential transactions, the seller is paying all real estate commissions which her listing broker shares with the buyer's broker, usually but not always, equally. There is a well-known local broker who frequently shaves off a larger portion for himself and tosses a leftover bone to the buyer's broker. Sellers agree in their listing agreement to the amount of commission and how it is to be shared with the buyer's broker. I'd love to hear Mr. Well-known's pitch for the unequal sharing. What Ms. Seller probably doesn't expect nor know to look for is an additional junk fee from her listing broker. I've written about these rip-off fees several times as far back as 2007 and thought they had quietly gone away by now but I encountered one last week.

I'm not sure at what point that $345 fee circled in red was disclosed to the seller or if it was just a coughed over small print item on the last page of the listing agreement. However it was disclosed/sold it was not justified and was a blatant rip-off of the client. In this instance the seller was already paying $12,762.50 which her broker shared equally with the buyer's broker. To gouge her for another undeserved $345 was, in my opinion, disclosed or not, shameful. My partners and I decided to form our company over a decade ago in large part because of our refusal to charge these types of fees to our clients when we were working for another local brokerage. At that time they cleverly called their junk fee a "Regulatory Compliance Fee". To quote Damon Wayans, "Homey don't play that." Adios.

Buyers and sellers of real estate, do not pay these fees. If you see one on the settlement statement, stop the proceedings and demand that it be removed. Trust me, your agent will be more than willing to pay that $345 out of his multi-thousand dollar commission check rather than let the deal die.

Some of the past posts about these fees for those who may have missed them.:
Unarmed Robbery Broker Style 
Revisiting Compliance Fees
Robberies Update

"Never make fun of people for mispronouncing a word. It means they learned it by reading." __Morgan Housel

The Curious Case of the Disappearing Agent

This is the true account of an interesting and perplexing transaction last month with a mysterious buyer and his communication-impaired buyer's agent from another city.

November 3: A buyer's agent calls the listing agent of a condo in Cocoa Beach asking to show. The unit is vacant and available to show anytime, but, being from Orlando, the buyer's agent doesn't have access to the local electronic lockbox system so he asks if listing agent can unlock the unit for him. No problem.

November 8: After no contact for five days after showing the buyer's agent delivers a very low offer contingent upon a mortgage. The listing agent presents the offer to the seller who doesn't want to counter as the unit is in a condotel complex where a mortgage is impossible to acquire unless it is from an unconventional source. The listing agent suggests countering without a financing contingency. Done.

November 9: Buyer counters at a lower number, cash, close in 30 days.

November 10: Negotiations ensue and buyer and seller verbally agree upon a higher number, cash purchase with a 30 day close and buyer's agent asks listing agent to write it up and he'll get buyer to sign. Written, signed by seller and delivered to buyer's agent same day.

November 11: Buyer's agent sends a lender's condo questionnaire but no signed contract. What? This was a cash offer. Buyer's agent says don't worry, buyer is just exploring his options. OK, management company completes the questionnaire three days later and listing agent forwards it to buyer's agent. Buyer's agent goes radio silent. 

December 7: The buyer's agent hasn't responded to any emails, texts or phone calls from listing agent for three weeks. Suddenly,  26 days after last contact, he emails listing agent to say that buyer is moving forward if the property is still available and is sending the signed contract shortly. Listing agent informs seller that the dead have arisen but neither holds their breath.

December 8: Signed contract is received from the buyer's agent with escrow deposit due in three days and a ten day inspection period with a close date of Dec. 30. Buyer's agent returns to his Faraday cage and relights the "Do Not Disturb" sign. Listing agent marks the MLS listing as "Backups" rather than "Contingent" and notes in the narrative that the contract is "shaky" and encourages backup offers. Fingers are crossed but seller's and listing agent's expectations remain minimal.

December 14: Escrow deposit is received, three days late. Buyer's agent surfaces briefly to acknowledge receipt and reenters suspension chamber blithely letting the inspection period expire four days later with zero contact..

December 26: After a two week disappearance buyer's agent notifies listing agent that inspections will be done Dec. 27 three days before closing. Inspection period expired on Dec. 18.

December 27 late night: Buyer's agent emails inspection report with a demand for all items to be repaired prior to closing on the 30th.

December 28: Seller refuses to do repairs but offers $300 credit at closing for the small items found. and buyer responds that he is willing to delay closing to give seller time to repair. Seller says, no dice, and closing will still happen on Dec. 30 or he will keep the deposit which became non-refundable ten days earlier at the expiration of the inspection period.

December 29: Buyer wisely agrees to the $300 repair credit, signs closing documents and initiates wire of funds late in the day which does not arrive until Jan. 3 for unknown reasons.

January 3: Buyer's agent who has been absent since demanding repairs the previous week sends his last text to the listing agent "Did you receive commission yet?"

While frustrating, this all-too-common level of incompetence from some of my fellow practitioners does provide entertainment and makes for lively discussions when the used house salesmen gather round the table for refreshments. I'd like to thank this buyer's agent and his peers for making the rest of us look better than we would sans the contrast. A hearty toast merry fellows.

"Just keep the motor runnin' this won't take very long
By the time the police get here we'll be already gone
We've got to leave 'em hangin' we can't leave 'em no clues
Just take the money and run
Lord I love robbin' banks" ___David Allan Coe

Realistic Expectations

9:30 AM, New Year's Day 2017 and the sky in Cocoa Beach is cloudless, there is no breeze with a temp of 70 degrees and an expected high of 77. According to the Cocoa Beach MLS there are 198 existing condos and townhomes for sale in Cocoa Beach and Cape Canaveral this morning. This is an all-time low. In addition, as I mentioned in my previous post, probably well over half of this tiny handful are over-priced by at least 10%. This makes for a frustrating search for the many prospective buyers hoping to buy in our town.

Condo sales for the year ended at 691 units, just a few less than last year's decade high with 31 units closed in 2016 that brought over $300 per square foot compared to just four in 2015. Prices continue their steady upward direction and I see no fundamental issues to change that trend. Mortgage rates are inching upwards but the Cocoa Beach condo market is not particularly sensitive to mortgage rates with over half of condo sales in 2016 paid for with cash, a trend that's been in place since 2008. Distressed sales have all but disappeared with just 5% of total sales in 2016 bank-owned or short sales.

Those of you looking for property here will be well-served by being aware of the low inventory situation and the price trend. If you're looking for a deal, you'll probably be disappointed, but if you can find a property close to current value, you'll probably be pleased with the value a year from now. We'd all like to purchase a beautiful beach property for less than it's current value. The big problem with that is that unless a seller is distressed she has absolutely no motivation to sell for a discount. In fact, with her property steadily appreciating, time is on her side. It only takes a few percent annual appreciation to cover the carrying cost of most properties. Why sell for for less than she wants if appreciation will pay the costs of not selling?  I've written dozens of posts about valuation and the dangers of becoming married to an estimation of value. A buyer whose search is focused on buying below his opinion of value better have an extremely accurate method for estimating value, a lot of patience and be prepared to possibly never buy. One of the dangers in the "must be a deal" mentality is that, in an appreciating market, values continue to move upwards while the search for  the "deal" drags on. Looking at sold properties in the last several years, even the highest dollar per square foot sales, the  buyers were rewarded with the passage of time.Your mileage may vary but it's probably worth keeping the historical trend in mind.

If anyone reading this lives at Ambassador Shores would you please have the maintenance guy put your navigational lights at the driveway entrance in the correct configuration of "red, right, returning" before a distracted guest takes out the bus stop some foggy night. And a big thanks to the person who took care of the crazy traffic light cycle on Atlantic Ave. at both Minutemen and Holiday Lane. My early morning drives through town are safer and faster. Happy New Year all and I hope the coming year proves to be prosperous and fulfilling. I'll continue my commentary on the market and the players in 2017. I appreciate all the encouraging words.

“My party has gone batshit crazy.” __Senator Lindsey Graham, Feb. 2016