Acid Trip Followup

I promised a followup on the Short Sale Negotiators on Acid story. It's almost as crazy as the original story.

The first short sale failed because a greedy first right owner stepped in and screwed up the process after the bank had agreed to $36,000. This was after a 14 month saga of crazy negotiations with Wells Fargo. The listing expired. Amazingly, a new listing agent took the listing two weeks later as a short sale and started all over. Rather than list at the bank's previous take it or leave it number of $63,000, she listed for $45,000. A new buyer signed a contract and the short sale process began for the third time. Either the negotiator at Wells Fargo had developed a tolerance for his particular hallucinogen or, more likely, a different negotiator was assigned. At any rate, the short sale was consummated and closed four months later in December 2013 for $55,000.

One month later, in January this year, after nicely remodeling the little one bedroom unit, it was relisted for $99,000. It closed yesterday for $94,000. This trip is over.

"I am not a pig farmer. The pigs had a great time, but I didn't make any money. "  Willie Nelson

Chugging Right Along

April 2014 was another busy month for real estate in our beach communities. There were 50 closed MLS-listed condos and townhomes in Cocoa Beach and Cape Canaveral in the month. Over 60% of all sales closed for cash. Activity was particularly heavy in the lower price range with over half of all sales closing for $150,000 or less. It's still amazing to me that a condo with two or more bedrooms, a short walk from the beach can be had that cheaply. Sixteen of the under $150,000 sales had multiple bedrooms.

The highest priced condo sale of the month was a resale Magnolia Bay fully furnished corner 3/3 that closed for $550,000 after only six days on the market. Second highest sale was a northeast corner top floor Ocean Oaks 3/3 in Cape Canaveral that also sold fully furnished. It brought $525,000. Speaking of Magnolia Bay, a milestone was reached last week when the last developer-owned unit went under contract. This marks the end of a long and grueling process. Or does it? There is still the site of the fourth building that has rested vacant since the market crashed. Can units be built there and sold for enough to make a profit? I can't predict. I will try to put together a history of this project from my first involvement up to this point as best I remember it and post it in the near future. It was drama from the very beginning and there was a lot of collateral damage, unintended consequences and hard feelings along the way. Congrats to the residents and the developer for hanging in there and seeing it to the end..

Other condo sales of note included;

5th floor SE corner Xanadu of Cocoa Beach 3 BR, 2.5 BA for $450,000 in 39 days

Xanadu direct ocean 15th floor nicely remodeled 2 BR, 2 BA for $397,500 in 30 days

2nd floor Cocoa Beach direct ocean southeast corner Windrush 3/2 for $317,000

Ground floor direct ocean Marko Villas south Cocoa Beach 2/2 for $200,000

South ocean view 3rd floor Majestic Seas 3 BR, 2 BA. Sold for $390,000 in 16 days.

1st floor Stonewood D bldg. 3 BR, 2 BA for $340,000

4th floor direct ocean Las Palmas 3/2 for $300,000

4th floor D building Mystic Vistas corner 3/2 with a peak of the ocean for $280,000

And, my favorite, a 2nd floor canalfront 2 BR, 2 BA Lookout Point downtown Cocoa Beach with garage and boat slip that went for $163,875.

Single family home sales were brisk in April as well with nine closed in Cocoa Beach and two in Cape Canaveral. Over half were over $400,000 including the highest recorded price ever for a single family home in Cocoa Beach of $1.9 MM for a beautiful oceanfront home in south Cocoa Beach.

Distressed sales represented 14% of the total closed sales compared to 6% of the current for sale inventory. There was but one short sale out of the 60 closed sales in the month. There are 70 single family homes offered this morning and 285 condos. Over 20% of the current condo inventory has been offered for over a year, quite a few for multiple years. Some of those are yet-to-be-built, others are developer owned units that have been for sale at outrageous prices for years, and the others are just over-priced. If a unit has to be asking within 15% of current market value to be "really" for sale, I'd put the "real" for sale condo inventory in our two cities at less than 225 units. It's tough to find the good ones. Tough but not impossible. I can help if you're looking.

Hope everyone has been enjoying the recent beautiful weather. If this week is any indication, we might be in for a hot summer. The ocean water temp is already in the high 70s and offers a welcome dip for beachgoers. The beach re-nourishment project finished up just as turtle season began on May 1. If one knows where to look, there is an abundance of beautiful olive shells that were apparently transported to the beach with the new sand. Due to their cylindrical shape, they tend to accumulate at a certain place on the beach at a certain time. Speaking of turtle season; no lights are allowed to be visible from the beach after 9 PM. Turn em off and close the blinds or risk a $350 fine.


"I don’t stop eating when I’m full. The meal isn’t over when I’m full. It’s over when I hate myself."  ___Louis C.K.

Public Service Announcement

I'll make this short. Buyers hoping to purchase a condo in Florida shouldn't even consider using a lender if the loan officer handling their loan is not in Florida. The loan on a Florida condo is as much about the condominium association's worthiness (as defined by the lender) as it is about the borrower's credit. Far too often I see very experienced and capable loan officers from other states fail to close a loan because they weren't able to anticipate the hurdles involved with the Florida condo approval process. A local Florida lender who does condo loans here all the time will be in front of these bumps and will stand a much greater chance of closing the loan and hitting the contract date. The distant loan officer who will fail will assure you that they can do just as good a job as any Florida lender. Don't fall for it. Repeated history tells a much different story.

"Ignorance and confidence are constant companions."  __John McAfee

Summer, Ahead of Schedule

The market for residential properties in the coastal communities of Brevard County is on fire. The traffic through Cocoa Beach may have slowed significantly since Easter but the demand for desirable properties has not. Low inventory is making the search for good properties frustrating for prospective buyers and Realtors alike. The percentage of distressed listings (short sales and foreclosures) in Cocoa Beach and Cape Canaveral has continued to shrink and stands today at 6% of the total. That's the lowest level since we saw our first short sale in 2007. There are but 277 existing condo and townhome units for sale this morning in Cocoa Beach and Cape Canaveral and just 66 single-family homes. Supply is tight.

There was a time in the recent past when a throwing an unsubstantiated lowball offer at a seller stood a reasonable chance of getting a response. That time has passed. Our market has evolved away from the Macy's model of high discounts off sticker price and more towards the Target model of pay the sticker, no discount at the register. Recent successful buyers have been those who knew the fair value of the property at the time and offered accordingly. Whether selling or buying, those participants who are realistic about market value and direction will eventually be rewarded. If a buyer or their agent can support a way-below-asking price offer with accurate recent comps, an unrealistic seller might be willing to accept a large discount to his asking number. Without supporting comps, a lowball is a snowball.

The number one tip for success in selling or buying real estate in the Cocoa Beach area today; Know The Fair Market Value...Right Now. Expect to buy or sell relatively close to that number. In a declining market that number tends to the downside of today's value. In the current rising market, the opposite. As always, knowledge is power and a necessary ingredient in a recipe for success. Good luck out there. Feel free to pick my brain if you have a question or to have me assist you in your search. I know this market like the battered deck of my old longboard and I'm willing to share.

Time to toot the horn. Walker Bagwell Properties closed yet another oceanfront Cocoa Beach home last week. We represented the buyers and this one set a new record for highest price ever paid for a Cocoa Beach single-family home. Of the 16 non-condo oceanfront properties closed for more than $500,000 in Cocoa Beach in the last two years our little office has been involved in five. Of the six oceanfront properties closed in Brevard County in the last six months over $1MM, Walker Bagwell has been at the table on half. We are not a large company (intentionally) but we know our stuff and are very active in our beachside market. We're here if you need us and don't mind the lack of matching blazers and sometimes open-toed footwear.

"I'm not getting into a bidding war" ranks right up there with "We don't have to sell," and "We aren't going to give it away" as symptomatic of self-defeating mindsets.  ___Mike Jaquish

Buyer Beware

Florida law does not require that sellers of property provide a property disclosure to a buyer. However, they must disclose material issues that are known to them. To wit; In Johnson vs. Davis, the Florida Supreme Court held that “where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer.” The disclosure can be made in writing or verbally. In addition, in Rayner vs. Wise Realty Co. of Tallahassee, the First District Court of Appeal provided that this same disclosure requirement applies to residential properties that are being sold as is. 

Buyers are still advised to do their own due diligence and to be suspicious of written and verbal disclosures. Human nature makes sellers forgetful especially where large sums of money are concerned.
 
“Success in investing is not a function of what you buy. It’s a function of what you pay.”
  ___Howard Marks

Condo Sellers, Get Your Act Together

Birds of a Feather

If you are currently or soon to be selling a condo unit, you need to do some paperwork preparation. Rounding up as many of these documents in advance will smooth the selling process. The documents required to be provided to all condo buyers (if requested) include current copies of the declaration of condo, articles of incorporation, the by-laws and rules, the most recent year end financial information, and the frequently asked questions document. If a buyer asks for these documents and they aren't provided then he has the right to cancel the contract right up to day of closing. Buyers will usually also ask for minutes of recent meetings so it's good to have those on hand as well.

If your buyer is getting a mortgage, expect to have to endure requests for other documents from the lender that you may not have anticipated. Those can include, among other things, detailed condo questionnaires, master insurance policies and possibly an elevation certificate. If you want to reach the closing table, you'll have to play along, as frustrating as it can be. A little advance preparation can reduce that frustration. Know who to contact when the requests come and make sure you can trust that person to round up the documents promptly. A slow or non-responsive contact can kill your sale. There is a grumpy, well-known property manager on the beach who will take great pleasure in refusing requests from your buyer's lender and your Realtor if she happens to be your contact. It might be a good idea to go ahead and touch base with the person who will be fielding the requests for documents and ask for cooperation. An advance box of chocolates could pay dividends.

Good luck in your selling. The market is strong but the lenders' current documentation requirements and guidelines for condo loans is making the process more stressful and difficult.

"It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong."   ___Thomas Sowell

It's Here - Embrace It

Early April Morning Port Canaveral

The magic sliver of springtime between the departure of the snowbirds and the arrival of the summer vacationers is well underway. When I walked to the coffee shop from my office this morning there wasn't a single car on southbound A1A in downtown Cocoa Beach. April opened up earlier this week with beautiful blue skies, temps in the high 70s and groups of cobia following giant manta rays just off the beach. Traffic in the aisles of the Publix grocery store is no longer a version of Hunger Games and the Cocoa Beach Country Club has available tee times and is actually able to put golfers without them on the course. I often wonder what snowbirds who have only visited during the hectic January to March season would think about Cocoa Beach the other times of the year.

Saturday - April 5, 2014

Mostly sunny. High 81F. Winds NE at 10 to 15 mph.

There were 59 MLS-listed condos and townhomes closed in the month of March in Cocoa Beach and Cape Canaveral according to the Cocoa Beach MLS. Eleven of those were under $100,000 and five were over $450,000. There was one short sale in the bunch and 12 foreclosures. During the same period there were 17 closed single family homes and one half-duplex. None were a short sale and two were bank-owned. Inventory remains at low levels with the percentage of distressed offerings continuing to shrink. 7% distressed today.

Total inventory of condos and townhomes for sale in the two cities is at 278 units with another 15 proposed units optimistically offered by the developer. At the current 50+ monthly burn rate it's going to take a lot of new listings to support the demand.

The beach renourishment work is currently on either side of Minutemen and will move into south Cocoa Beach in the coming weeks. You'd think in 2014 that there would be a better way to replenish beach sand without burying all nearshore life (sand fleas, periwinkles, etc.) and disrupting beach fishing and surfing for months/years. I wonder what would happen if those giant piles of sand from the shoals were placed just offshore south of the Port entrance rather than pumped onto the beach. I'd think (idiot thinking here) that the natural southerly flow of sand that the channel disrupts would replenish the beaches in a slower and less harmful manner. Oh well.

The International Space Station will be visible here tonight (Sat. April 5) barring no clouds. It will appear in the southwest at 8:38 and be visible for about six minutes as it travels overhead to the northeast. Golfers, our Cocoa Beach Business League starts back up next Tuesday. We play nine holes every Tuesday weather permitting and the cost is less than $20 per round which includes skins. Skins winners usually win around $300 but I've seen it as high as $700 on a holdover week. Come join us. It's fun even without a skin win. Ongoing handicapping.

"If your chute doesn't open don't panic. Just try and get it to work. You have the rest of your life to figure it out."  _____Jump School Instructor

Another Record

The inventory of condominiums for sale in Cocoa Beach and Cape Canaveral first dipped below 300 total units in May of 2012 and has held steady right around that number ever since. The supply had been in steady decline since peaking right around 1100 units in 2006. Our MLS shows 303 units for sale this morning. Of that total, 23 are proposed and not under construction.

In 2006 there was not a single distressed sale. Four years later, in 2010 over half of all condo sales here were distressed, either short or foreclosed. By the time inventory bottomed out in 2012, foreclosures and short sales had declined but still represented one in every four condo sales. That decline continues. There are only six short sale condos offered right now and 14 foreclosures. At 7% of the total, this is the lowest level of distressed listings since 2007. If the banks would get realistic with their foreclosure asking prices, the percentage would be even less. Only one of the 14 bank-owned units has been for sale less than 50 days. That is a result of the banks' trend to unrealistically high asking prices.As recently as last year, most foreclosures were attracting multiple offers within the first two weeks of listing.

Buyers looking for a unit in an oceanfront building in Cocoa Beach or Cape Canaveral have a choice of 127 units at asking prices from $89,900 to $1.295 MM. There are another 57 units for sale in either Banana River or canal complexes at prices from $84,900 to $599,000.

I saw another interesting offer this past week. The buyer's agent had written in the special clauses section that the offer was contingent upon the buyer getting a "satisfactory" mortgage. There was no mention of interest rate, term or type of mortgage. If the seller accepts that offer as written, the buyer has, in effect, a contract from which they can walk right up to day of closing. Perhaps this was intentional strategy but I suspect based on that phrase and other terms of the offer that the agent didn't know what she was doing. Real estate isn't rocket science by any stretch of the imagination but that doesn't mean everyone with a license is competent. I've seen enough stupid mistakes to fill a book. I saw a Florida sales contract for the first time AFTER I had been issued my license from the state. Contracts are not part of the education required to get a license. My education didn't really begin until I began writing offers and seeing properties. I'm still learning. Every offer I write or read makes me better at what I do. All other things being equal, consumers would be advised to select an agent with experience and, if it can be determined, smarts. Buying an ad on a major real estate web site does not require either. Choose your agent carefully.

"If all your friends jumped off a bridge, would you jump too?"

"Oh jeez. Probably."

"What!? Why!?"

"Because all my friends did. Think about it -- which scenario is more likely: every single person I know, many of them levelheaded and afraid of heights, abruptly went crazy at exactly the same time... ...or the bridge is on fire?" 

_______Randall Munroe