Thoughts about value

I spend at least part of every day looking at recently sold properties to try to determine the fair market value of other properties. It may be for someone who is thinking of selling and wants to know what they can expect to get for their property in today's market. More often it is for a buyer who is preparing to make an offer. In most cases in our market it is fairly easy to determine a fairly close idea of current market value. That doesn't mean that asking and offering prices will have any basis in reality. There is a strong contingent of unreasonable parties on both sides of the fence willingly dismissing the comps. These unreasonable parties rarely face one another across a closing table for obvious reasons.

All property sales involve at least two differing opinions about a property's value. The asking and offering prices will usually include factors other than just that person's opinion of fair market value. All sellers want to believe in the existence of an uninformed buyer who is willing to overpay. All buyers believe that there is a motivated seller somewhere who will sell his property to them below fair value. Both are sometimes right. What is far more common is that the non-distressed sale of a property will happen very close to fair market value for that property. With property sales records easily accessible online it is relatively easy for anyone with internet access to determine a fairly close idea of fair value for anything but the most unique properties.  Since comps are rarely exactly like the subject property, some adjustments usually have to be made to determine a close guesstimate of fair value. That means that the exact current value can't be determined, only a close range. A sale is going to involve some modification of opinion on both sides.

Typically a reasonable seller will look at the comps, make adjustments for differences and then list their property above that number to allow for negotiating room and/or the outside chance that an uninformed buyer will overpay. A reasonable buyer will look at the same comps, make similar adjustments and then offer below their opinion of value to allow for negotiating room and the outside chance that the seller will just accept their first low offer. If reasonable negotiations ensue a number somewhere in between is usually reached and a sale happens.

An unreasonable seller will dismiss the comps and list at a much higher number. It may just be an arbitrary amount that they've decided they want or it may be a specific number that they need. With these types of sellers, a rational argument for the fair price based on comps is a waste of time. Likewise, an unreasonable buyer will also dismiss the comps and make an arbitrary low offer that will get either an angry rejection or no response. These unreasonable parties are fairly active in the market just not in the closing rooms.

If you want to sell or buy a property, run the comps and set your asking or offering price accordingly. Hoping for that uninformed other party is, in most cases, just going to prolong the process. One other note; Don't dismiss comps that aren't in line with your expected number. If you're a buyer, you can't just use the low comps and ignore the high one. Likewise, sellers. That low sale next door is relevant whether you want to believe it or not. You know I'm talking to you, Mr. Listing Agent. You embarrassed yourself when you responded to my fair offer last week with a comp in another building while ignoring the identical comp on the same floor in the same building. Not to mention not even being aware of the most recent sale in that other building that also confirmed that our offer was right on the money. If your seller is unrealistic, just admit it. I realize that some agents' business plan involves taking over-priced listings and hoping that with time the market will beat their sellers into a more reasonable state of mind. That's fine. Just don't try to justify a crazy price with cherry picked or unrelated comps.

Every seller's and buyer's agent should be running comps for their clients when the moment of setting a price comes. If your agent isn't doing this for you it may be time for his pink slip. If you want a reasonable idea of what a particular property is worth contact me. I'll tell you what the comps suggest. What you do with that knowledge is up to you. Doesn't mean you can't dream. That redneck lottery winner who hasn't hooked up the internet connection yet may be the next one to view your property and might pay you double what I just told you it was worth. Lightning does occasionally strike.

"Reality is wrong. Dreams are for real." ___Tupac Shakur

Million Dollar Gator

A dangerous reptile similar in size to the one above ignited a chain of events that traumatized at least one non-Floridian, changed the direction of several people's lives and left a trail of close to a million dollars of failed real estate closings and lost income in his wake. It began the day before two scheduled closings this week. The first was on a waterfront home in Melbourne Beach and the second on a waterfront condo in Cocoa Beach. The sellers of the home were also the buyers of the condo. Their contract to purchase the condo was contingent upon the successful closing of their home. The buyers of the home, who were from somewhere north of the Florida state line, had completed inspections, the mortgage was approved and they were set to close the following day. They arrived to do their final walk-through. A small alligator, oblivious to the human world, had chosen that particular sunny afternoon to soak up the warmth along the lakeshore within sight of the backyard. The soon-to-be-relocating-to-Florida couple spotted the reptile and one of them, pardon the vernacular, freaked out and called the next day's closing off. That, of course, torpedoed the closing of the condo.

The aftermath: Two families who thought they'd be moving this week are back in limbo. Two properties are back on the market. One of the two families is probably having a soul-searching discussion about their relocation to a tropical state. A title company will not be paid for two title searches and preparations for two closings. A mortgage company will not collect their fees (other than those related to application) even though loan officers, processors and underwriters spent hours on the mortgage. Three real estate agents will not collect pay checks although every task related to a sale other than the signing of the closing documents had been completed. Two sellers are changing their possibly life-altering plans and probably quite a few other as-yet unknown dominoes are teetering. All because one of the estimated 1.3 million alligators in Florida chose a particular moment and place to warm his reptilian blood. Bad gator.

"I am a bundle of nerves riddled with irrational fears."  __Tori Spelling

What's Sellin Right Now?

Twenty MLS-listed condos and four single family homes have closed so far in Cocoa Beach and Cape Canaveral in February 2013 according to the Cocoa Beach MLS this morning. Three of the four homes were waterfront and three of the four sold for cash. The highest price paid was $465,000 for a two story, open Banana River 3 bedroom 2.5 bath, remodeled pool home with dock and boat lift and two car garage.

Of the twenty condos closed so far, only four sold for more than $200,000. Sales of note included;

A fully furnished 2nd floor Flores Ocean Suites direct ocean 3 BR, 3 BA with 2060 square feet and garage that closed for $473,000.

A fully furnished 4th floor, direct ocean Shorewood 2 BR, 2 BA with 1866 square feet and garage that sold for $370,000.

A partially remodeled 4th floor direct ocean B building Royale Towers 3 BR, 2 BA with 1445 square feet and garage closed for $284,000 after 32 days on market.

A north facing 3rd floor River Bend 3/2 with 2292 square feet and one car garage closed as a short sale for $215,000.

A beautiful foreclosed 3rd floor, 7 year old direct river Majestic Bay 3/2 with 2052 square feet and private 2 car garage closed for $196,000 after 6 days on market. It sold new in 2007 for $450,000.

Of the twenty closed condo sales all but four sold for cash. Almost half (9) were distressed, either foreclosed or short. This morning total condo and townhouse inventory in the two cities stands at 320 units, 30 of which are either foreclosures or short sales. There are but three distressed single family home listings of the 57 total.

A casual observation of my own and other agents' recent activity is that this is one of the busiest winter seasons in years in our local market. I use the term "winter" loosely as today is but the second day this year requiring more than shorts and a singlet to be comfortable. Competition for good properties is intense in large part because the inventory is so low and so picked over. Of the dozen or so offers I've presented this year, at least a quarter resulted in multiple offer situations. There are no rules for how multiple offers must be handled. A seller can simply choose the offer she prefers and work with that one. What usually happens when more than one offer is received is that the listing agent will go back to the buyers' agents and ask for their best and highest offer to be considered by the seller at the same time. Highest offer doesn't always win. A cash offer and/or a quick close might win over a higher offer that is contingent upon a mortgage. If you find yourself being asked for your best and highest offer consider your offer carefully. The availability or lack thereof of other acceptable properties might affect how aggressive your offer should be. You may not like it but if you want to buy a good property in a desirable market with low inventory, you should be prepared for this possibility. Prices, though moving up, are still far below levels of recent years. Many condos are still selling for less than the cost to build them.

Mid 80s predicted by weekend. Our brief "winter" appears to be over.

"Whenever you find yourself on the side of the majority, it's time to pause and reflect." ___Mark Twain

January Condo Sales

Like single family homes, condo sales were strong in January. A total of 43 MLS-listed units closed in the month is Cocoa Beach and Cape Canaveral. A surprising 44% of those closed sales were distressed, either short or foreclosed. That is not an accurate reflection of the current for sale listings, merely a backlog of formerly-contracted units that happened to close in the month. Only 7% of the 309 active for sale listings this morning are distressed.

Of the 43 closed sales, only three were at prices over $300,000. Two of those were Meridian units, one for $620,000 and a short sale for $515,000. The other was a Shorewood direct ocean 3/3 with 2338 square feet that sold fully furnished for $430,000. Seventeen of the sold units were on the market less than a month, one of the side effects of our low inventory. Sixteen of the closed units sold for less than $100,000. Of those sixteen all but one sold for cash. Two thirds of all 43 sold units were bought with cash.

Take-away: all trends unwavering, low but steady inventory, high percentage of cash sales, rapidly shrinking distressed inventory, high competition and quick contracts for attractive, priced right units, steady to slightly increasing prices.

"I personally believe that U.S. Americans are unable to do so because, uh, some people out there in our nation don't have maps and, uh, I believe that our education like such as in South Africa and, uh, the Iraq everywhere like such as, and, I believe that they should, our education over here in the U.S. should help the U.S., uh, or, uh, should help South Africa and should help the Iraq and the Asian countries, so we will be able to build up our future, for our children." 
__Caitlin Upton, Miss South Carolina Teen 2007

January home sales

Single family home sales were up in the month of January 2013. One year ago, in January 2012, only five homes closed in our two cities and in December 2012, six. As of this morning eight are recorded as having closed in Cocoa Beach and Cape Canaveral in the month of January 2013. As always that number could increase as tardy listing agents and/or their offices get around to closing their listings. The ones who often don't answer their phones when I call for showing appointments are usually the same ones who forget to update their listings. Just saying.

The highest priced sale was a direct ocean four bedroom home with three and a half baths and 2344 square feet in south Cocoa Beach that closed for $887,900. This home has been on and off the market since 2006 when it was offered for $1,899,000. It finally got a contract when the price was dropped to $929,000 last November. The buyers paid cash.

Another beauty on the Banana River at the northwest corner of Country Club in Cocoa Beach sold for $790,000. This four bedroom four and a half bath home has 3855 square feet and a four car garage. A big pool on the river with boat house and lift round out the property.

A four bedroom canal home off Minutemen in Cocoa Beach with 1878 square feet sold for $325,000 after 73 days on the market. It had an extra 1000 square feet of unfinished upstairs space.

A non-waterfront 4/2 with 2009 square feet and a two car garage in Cocoa Isles sold for $225,000 after 117 days on market.

Three blocks from the beach in Cape Canaveral a newer 2/2 with 1736 square feet and a two car garage sold for $207,000 in just 37 days.

A foreclosed 3/2 Cape Canaveral home needing some work with 1741 square feet and two car garage closed for $166,501 after 70 days on the market.

Another handyman three bedroom, one and a half bath in Cocoa Isles closed for $165,000 after 48 days on the market. One car garage and 1328 square feet.

Our inventory of single family homes in the two cities is still very low although above the lowest point we hit late last year. There are 59 active listings this morning ranging from $2.7 million for a mac-daddy direct ocean south Cocoa Beach beauty to $109,000 for a well-used 2/1 bungalow across the street from the ocean a few blocks from the beauty. Ten of them are asking more than $900,000 and eight less than $200,000. Two are short sales and one is a foreclosure. Over half (33) of the listings are waterfront.

The recent trends are all still in play; high competition for good, priced-right properties and a high proportion of cash buyers. If you plan to get a mortgage for your purchase you need to talk to your lender before making an offer. You'll stand a better chance of competing with cash buyers if you provide a pre-approval letter with your offer. Some will not even look at offers without that letter. With lenders, local is almost always better than out-of-town. Lastly, if your buyers agent isn't telling you what you're reading here, it may be time to give em a Donald Trump and find one who knows what's going on.

Oh, baby, baby, baby, baby baby.
Baby, baby baby, b-b-b-b-b-b baby baby, baby.
Baby baby baby
Come back, baby, I wanna play house with you.
____Elvis Presley

January half time

There are 302 MLS-listed condos and townhomes for sale in Cocoa Beach and Cape Canaveral this morning, slightly more than the average for the last few months. In addition, there are 55 single family homes. Of the 357 total residential listings, 10% are distressed, the lowest percentage since 2007.

23 condos have closed so far in the month, all but two under $250,000. The two higher sales were both direct ocean, one a short sale 3/2 at Meridian that finally closed for $515,000 after months under contract. It sold brand new in 2007 for $679,900. The other was a 3rd floor Shorewood southeast corner 3/3 fully furnished that closed for $430,000.

A nicely updated ground floor direct ocean Sands 2/2 in downtown Cocoa Beach sold for $242,500 fully furnished.

A foreclosed 4th floor direct ocean Canaveral Sands 2/2 went for $233,000 or $33,000 over asking price. This will likely go down as the smoking deal of the month.

A fully furnished 2nd floor Shorewood 3/2 corner without an ocean view closed for $215,000. Giant wrap-around balconies, 2104 square feet and a one car garage.

Two canal front Beachwalk 2/2 units closed for $165,000 and $128,500. Both had boat slips with lifts and one car garages. The cheaper one needed quite a bit of work. The other was upgraded and fully furnished.

There are a few interesting new oceanfront listings in the last couple of weeks for those looking, including four in south Cocoa Beach. Competition for the good ones remains high. If you paln to get a mortgage it would be constructive to talk to your lender before beginning the search especially if looking at condos. The rules remain different for them. It would probably be prudent as well to get out and enjoy this beautiful weather. It is January after all and things could change quickly.

"How could we possibly appreciate the Mona Lisa if Leonardo had written at the bottom of the canvas: 'This lady is smiling because she is hiding a secret from her lover.' This would shackle the viewer to reality."

Occasional flurries?

The final numbers for December and the year are now close enough to post. The total number of MLS-listed condo sales in Cocoa Beach and Cape Canaveral for 2012 was 613 units. December finished out the year with 44 closed sales. The range was from $418,000 to $38,000 with a median of $151,000. Eight of those or 18% were distressed, either short sales or foreclosures, median price $100,000.

Distressed sales make up 13.5% of the current for sale inventory (296 units) this morning with 40 units offered from $350,000 to $34,900, median $124,000. The Pier Resort still dominates the distressed category with six units left at prices from $169,900 for 1900 square foot 3/3 units to $205,000 for the 3400 square foot units.

There were only five single family home closings in December in the two cities and none of them were distressed. Median price $265,000. Total for sale inventory this morning is 53, median asking price $375,000. There is but one distressed sale in the 53 listings, a canalfront 3/2 in Cocoa Beach asking $319,900.

So far, winter has not arrived and temperatures are holding well above average for this time of year. I hear the occasional relocated northerner complain about lack of cool temps but very few long term local folks express anything but pleasure at January temps in the 70s. To each his own. I'm happy shirtless and barefooted regardless the month. Let's make the most of this new year.

Beware advice from the accidentally successful. __Larry

That's a wrap

Thought I'd do our December wrap-up a little early as I'm heading out on a boys' adventure in the islands very soon. As most of you already know, 2012 was a record-breaking year for real estate sales in Cocoa Beach and Cape Canaveral. We exceeded the number of sales for every year since 2005 as we continued the upward trend that began in 2009 after hitting our lowest number of sales ever in 2008. The major contributing factor for the strong sales was price. With prices stabilizing at their lowest since the decline began in 2007 and inventory rapidly shrinking, potential buyers were motivated to act by that confluence. As of this morning, December 30, 2012, 606 MLS listed condos and townhomes and 115 single family homes have closed in Cocoa Beach and Cape Canaveral during the year. One quarter of those sales were distressed, either short sales or foreclosures. For sale inventory this morning stands at 311 condos and 46 single family homes, less than half of the total number of sales in 2012. Of these active listings, 12% are distressed. This significant change in dynamics suggests two things for 2013, less total sales and rising prices.

Condo sales so far in December indicate rising prices in a few complexes. Examples:

Ocean Pines 6th floor SE corner 3/2 with 1702 square feet that closed for $405,000 or $238/sq ft.
Sandcastles 3rd floor direct 2/2 with 1286 sq ft closed for $300,000 or $233.28/sq ft.
A 4th floor south facing Mystic Vistas C bldg 3/2 with 1686 sq ft closed for $290,000.
A north facing 6th floor Windrush 2/2 Sand Dollar with 1517 sq ft closed for $265,000.
A 2nd floor direct ocean Royale Towers 1/1 with 888 sq ft closed for $158,000.

We will likely see a large number of units closing tomorrow, the last day of the year. I will do a more comprehensive 2012 wrap up in a few days when all the numbers are in and the closed listings are finalized. I hope everyone had a happy 2012 and that 2013 is happy and prosperous for us all. Happy New Year.

“Life is pretty simple: You do some stuff. Most fails. Some works.

You do more of what works. If it works big, others quickly copy it.

Then you do something else. The trick is the doing something else.”

_____Leonardo da Vinci