How to Choose a Real Estate Agent

I struggled with the title of this post. I considered "How NOT to Choose a Real Estate Agent" but (uncharacteristically for me) discarded that in favor of a positive title although the intent of the post really is about what NOT to do when selecting an agent. I briefly touched on this in a post a couple of months ago but figured, considering the strong shift taking place, that it deserved revisiting..

The thing that got me on this subject again was the recent big increase of properties being listed by out-of-town agents. Over the years I've worked in the Cocoa Beach and Cape Canaveral market, most property listings here have been with local offices. I suspect most US markets have been the same. Makes sense to have a broker who knows the market and is readily available for buyers and their agents. Things are different now and the change happened quickly. Over a third of the new listings in the last two months in Cocoa Beach and Cape Canaveral are with agents and/or offices in other cities. There have always been some agents in other cities in our county who would have the occasional listing here, even some who did quite a bit of business, but never the proportion that we're seeing now. What happened? Consumers embraced the big online real estate sites for their real estate research and in the process discovered what appeared to be an easy way to find a local Realtor in their target market. The problem? The sites allow anyone willing to write a monthly check, no matter their location or qualifications, to buy their way into the list of local agents.

I searched Zillow this morning for a Cocoa Beach buyer's agent. (Results were similar for seller's agents.) Out of 13 "Trusted Pros" on the first page of 500 total results, only four work in offices in Cocoa Beach or Cape Canaveral. Note that the recommended agents rotate for every search so your results may differ from mine but, after doing several searches, it's obvious that my results are typical. Two of the Cocoa Beach "Trusted Pro" agents work out of offices in other counties over an hour's drive from Cocoa Beach and another seven work out of offices in other cities in our county. Four of the recommended buyer's agents had zero sales in Cocoa Beach or Cape Canaveral in the last 12 months and another agent had one. How did they get recommended? Easy. They pay Zillow to be there. No skills, experience or even physical proximity required. I could buy my way into recommended agent status in Key West or Pensacola if I chose. My value to a buyer in either of those markets would be considerably less than most of the experienced local agents but, that wouldn't stop an online advertiser from accepting my monthly check and proclaiming me a "Trusted Pro" in the area. The same is true for these out-of-town agents on the Cocoa Beach agent list. Does it matter? If I'm landing in Tegucigalpa I'd much rather have a pilot who has experience with that hairy airport than a guy who is making his first landing there. The more experience with that runway, the better. An agent unfamiliar with our market might not kill you but it is not in your best interest to have her in the left seat.

Feel free to use Zillow and other online real estate sites to look for a buyer's or listing agent but do yourself a favor and at the very least select an agent in the actual town you plan to buy or sell in. And, remember that there are active experienced agents in every market like myself who choose not to pay to be included in the Zillow cluster. You may overlook your very best choice if you limit your research to paid ads. I may be forced to surrender at some point and pay to be agent number 501 in Cocoa Beach but for now I prefer to be excluded from the list even though I have hundreds of successful landings and takeoffs here and know the terrain like the back of my wrinkled hand. For anyone looking to buy or sell a place here, you'd be well-served to extend your search for an agent outside the "Trusted Pros".

"Being the quiet, mysterious one doesn't get the ladies unless you happen to be high-end handsome." __applicable metaphor

Persistance

The slowdown in sales that I commented on in my last post, Cooling Trend, is persisting. The rate of new listings is not keeping up with the rate of sales. The inventory of  condos and townhomes in Cocoa Beach and Cape Canaveral this morning is 267 units if I include 19 non-existing, pre-construction units and 9 over-priced units that have been for sale and sitting empty since their construction six and seven years ago. That leaves us with 239 units of which another 33 have been for sale longer than nine months, several for years, indicating unrealistic pricing. An overflowing handful of other listings have had their days on market manipulated to appear as not having been for sale forever so the "really for sale" inventory of condos and townhomes in our market is below 200 units, probably below 150 if we filter out anything asking 20% or more above market value. That dearth of inventory, not a lack of interested motivated buyers, is the reason for our current sales rate of about one condo closing per day. We averaged over two per day the first half of 2014. I don't see any near-term catalyst that will be improving that. If anything, we may see sales decline even more as we move into the fall months.

Back to the mid 90s today. I can't imagine living anywhere but the coast in Florida. No matter the heat, we can count on the cooling sea breeze by early afternoon most days. Get away from the coast and the heat index goes Richter. The theme parks and inland golf courses must be especially brutal this time of year. Thankfully, the Cocoa Beach Country Club course sits on an exposed peninsula in the Banana river so it is exposed in most places to any breeze.

Our next scheduled launch is a SpaceX Falcon 9 in four days. Check the schedule of all upcoming launches HERE. A tropical storm could be influencing our local weather by the end of next week. A poorly organized mass is approaching the Lesser Antilles right now and moving northwest but not expected to have favorable conditions for turning into anything significant. Meh.

"Someone who is nice to you but rude to the waiter is not a nice person." anon

Cooling Trend

The crazy pace of sales in Cocoa Beach and Cape Canaveral has slowed. After a blistering first half of the year for property sales, July returned to a more sedate pace. My constant predictions about a coming slowdown have until now been entirely wrong. It seemed impossible that we could sustain an average pace of 63 sold condos a month with an inventory of around 250 existing units. Somehow we did until July. As of this morning, the Cocoa Beach MLS is reporting a total of 45 sold condos and townhomes in the month of July and 11 single-family homes. That's compared to 67 condos and 14 single families in June. There are 255 existing condos and townhomes for sale at the moment along with 19 very-optimistically offered pre-construction condos.

I expect the slowed pace to continue. Eleven of the 255 for-sale condos are bank-owned and six are short sales. The days of high numbers of distressed sales are, for the most part, behind us. We are at the lowest ratio of distressed offerings since the first short sale closed in our market in 2008. There are 27 pending distressed contracts yet to close so the boost in numbers from those will be inconsequential. While no one was looking, our market has returned to a healthy supply and demand dynamic. Demand exceeds supply by a good margin at the moment.

Of the 45 closed condo sales in July, 25 sold for cash. Only one of the sub-$100,000 purchases was with a mortgage. A quarter of the condo sales were at prices above $285,000 and a quarter were below $107,000. The higher priced sales were a good mix of ocean and river units.

There are currently 47 direct ocean listings. Six of those are asking $250,000 or less, most in that range in older buildings along Ocean Beach Boulevard. Twenty of the units have been for sale for over 300 days telling us that they are most likely overpriced.

I hope those of you who are surfers got to enjoy our first, brief hurricane swell this week as Bertha passed off our coast. Yours truly missed it completely while scalloping off Florida's west coast. On a bright note, the scallops are thick this year and my crew was able to limit out every day in less than an hour of snorkeling the grass flats. If you've never done it, it's a great activity for kids and adults alike and the bounty is very tasty.

"...one of the worst things society has done is name adipose tissue the same thing as a macronutrient."  comment on fat by a random Redditor

Big One Fails Again

It's happened again. A bushy-tailed loan officer promises he can loan on a condo and then discovers right before closing that the particular condo complex will not satisfy his bank's lending guidelines. The twist is that in this case the lender is local. I chant the "use a local lender" mantra constantly but it appears I need to qualify that. An overconfident, inexperienced local loan officer can blow your deal up just as effectively as the banker cousin back in Fond du Lac.

In this particular case the agent (not me) recommended a local lender who offers a specific loan product for unwarrantable condos, which this one was, to the buyer. The buyer elected instead to go with a local branch of the number one mortgage originator in the nation. The loan officer energetically claimed that he could do the loan. Remember the "Does This Make My Butt Look Big" post? He was just doing his job even though he didn't know there was no way his bank would loan in this particular complex. Any loan officer experienced with condos in our market would have instantly recognized that this condo-tel would be a problem, if not impossible, loan. The buyer didn't find out that the lender couldn't loan on the unit until well towards closing and is now scrambling trying to rescue the purchase through the originally recommended local lender.

Our takeaway here is that it is better to have a lender who can close the deal than one who promises the lowest rate or the bank with the most recognizable name. In addition, prospective condo buyers would do well to familiarize themselves with possible hurdles. My "Condo Mortgage or Root Canal" post from three years ago listed the major items that the lenders want to see in condo associations. A weekly rental unit may be attractive for the income possibilities but any condo that allows weekly rentals is going to be a mortgage challenge for multiple reasons. Ask your agent for recommendations for lenders who have products available for problem complexes.

I hope the surfers among the readers got some of the fun surf last Sunday. It was one of those rare summer surf days with a decent sized ground swell, clean conditions and all the waves one desired. Lots of smiles around town Monday. This coming Friday and Saturday are the last two days of our six day red snapper season in Atlantic waters. I got my one fish limit last Saturday with a 20 pounder and hope to repeat it again this weekend.

"Music was a lot better when ugly people were allowed to make it." ____Otis Gibbs

Back In the Saddle

 I'm back after a couple of weeks above and under water in the nearby paradise of the Abacos. It still blows my mind that the opportunity to put the only footprints on ten different beaches a day and to dive and swim in water as clear as air is just a little over an hour from here. If one's impression of the Bahamas is a cruise ship visit to Freeport or Nassau it's no more accurate than an impression of Cocoa Beach based on a visit to Ron Jons and the Pier.

 The final numbers for June were even more impressive than I last posted. There were 67 closed condos and townhomes in Cocoa Beach and Cape Canaveral in the month with a median price of $168,000 and 14 single family homes at a median price of $290,000.

The top 16 condo sales:

• The top floor (17th) NE corner Stonewood, fully furnished 3/2 with 2170 square feet and a two car garage for $580,000
• 3rd floor direct ocean Solana Shores 3/2 with 2095 square feet and a one car garage for $535,000
• A top floor direct ocean, fully furnished Meridian 3/2 with 2072 square feet and a one car garage for $717,500
• Remodeled 6th floor south facing SE corner C building Royale Towers 3/2 with 1860 square feet and a one car garage for $380,000. This one was taken out in first right of refusal.
• Nicely remodeled 8th floor NW corner 2100 Towers 2/2 with 1600 square feet and a one car garage for $350,000
• 5th floor direct ocean, two level Sunrise Tower 2/2 with 1457 square feet and a one car garage for $335,000
• 7th floor original condition, direct ocean Las Palmas 3/2 with 1500 square feet and a one car garage for $332,000
• 2nd floor corner, direct river Solana on the River 3/2 with 2187 square feet and a one car garage for $315,000
• Beautifully remodeled 3rd floor direct ocean Emerald Seas 2/2 with 1602 square feet and a one car garage for $310,000
• 2nd floor corner Solana Lake 3/2 with 1956 square feet and a one car garage for $300,000
• 4th floor corner Bayport 3/2 with 2092 square feet and a one car garage for $297,500
• Non-oceanfront Shorewood corner 3/2 with 1992 square feet and a one car garage for $290,000
• 5th floor Solana on the River 2/2 with 2055 square feet and a one car garage for $289,900
• Remodeled and furnished 10th floor direct ocean 2100 Towers 2/2 with 1200 square feet and a one car garage for $302,000
• 6th floor partially remodeled, bank-owned, direct ocean Stonewood 2/2 with 1317 square feet and a one car garage for $275,000
• Furnished, original condition, 2nd floor Royale Towers B building 2/2 with 1256 square feet and a one car garage for $274,900

Ten of the these units sold in less than 22 days on the market.

There are 281 condos and townhomes for sale on the MLS in our two cities with 15 of those yet to be built. Eight are short sales and 13 are bank-owned. There are 70 single family homes on the MLS. One is a short sale and four are bank-owned. Inventory is not sufficient to meet the demand so buyers can continue to expect to have competition for attractive listings. Feel free to contact me if you have questions or just want to bitch about some stupid comment or forecast I've made. I'm here for you.

"You can always count on Americans to do the right thing -- after they've tried everything else."  __Winston Churchill

Happy Independence Day 2014

I can't imagine that it will come as any surprise to anyone familiar with the Cocoa Beach real estate market that June 2014 was another record month for closed properties. Not quite as many closed sales as May but it was the busiest June for closed sales in Cocoa Beach and Cape Canaveral since June 2005 with 64 closed condos and townhomes and 13 single family homes. That is as reported by the often tardy listing agents in the Cocoa Beach MLS. The number will likely increase as the slacker contingent drags back to the office next week and updates their listings. To put that in perspective, almost a quarter of the total condo listings in our two cities sold last month and slightly less than a fifth of all single family listings. Conservatively speaking, demand is far exceeding supply and the imbalance looks to continue. I will detail specific sales in a follow up post.

Hope everyone is enjoying the long holiday weekend and operating outside the stupid zone. Party defensively and point your fireworks down range.

“Happy 4th America. I love ya, ya old coot. Have fun mixing liquor and fireworks today and don’t forget to STOP DROP AND ROLL!”  ____Jim Carrey

Welcome To Summer

The tally on closed condo sales for last month in Cocoa Beach and Cape Canaveral wound up at 73 units according to the Cocoa Beach MLS. That total ties with last July as the most condo sales in nine years. That's a big deal. Back in June 2005, the last time we had more closed sales in a month, there was three times the inventory for sale and mortgage qualification was still in the "need only fog a mirror" level of scrutiny. In June 2005 four out of five condo sales were financed. In May 2014 only one third of the condos and townhouses sold were financed. In 2005 condos were selling for a huge premium to today's prices, some for more than twice today's price. Those crazy prices began retreating in late 2006 for most buildings and, after bottoming a couple of years ago, are inching their way upward in most complexes.

A few examples:

•  In June 2005 a Cape Winds 4th floor 2/2 closed for $413,000. A similar condition 2nd floor unit recently closed for $220,000.
• Windjammer 3rd floor 2/2 sold for $450,000. Two units are available today asking below $300,000.
• 5th floor Stonewood 2/2 sold for $495,000. A 16th floor same floor plan unit sold recently for $275,000
• A 5th floor partially remodeled Stonewood Sand Dollar 2/2 closed back then for $530,000. An exquisitely remodeled 5th floor Sand Dollar just closed for $384,700.

Those of you hoping to buy have a much reduced supply of units to pick through. Don't despair. Prices aren't running away and we are getting just enough new listings to handle the demand. There are 262 existing units currently for sale in our two cities with right around 100 in ocean complexes. Know what you're looking for and be realistic with expectations for price. You're not going to have to pay anywhere near 2005 or even 2010 prices but don't expect to pay less than the last similar unit. It pays to discuss recent sales of similar properties with your agent so you'll be able to recognize a fair deal when one presents itself. As always, if planning to get a mortgage, talk to your LOCAL lender before you start the process. Know what's going to be required for a down payment and don't waste your time looking in complexes that won't qualify. That cute little Cape Winds unit may be perfect for you but Roger at First Muskellunge National might not realize that there is no secondary market for condo-tels until days before closing. He'll apologize but he won't be able to close. A local lender would know that your hopes for a 20% down mortgage on that unit are not likely to happen. He might offer alternative financing solutions before letting you waste money on appraisal and inspections. Your buyer's agent, if she knows her stuff, will be able to tell you which complexes won't or might not qualify and can save you wasted time. If she can't, pink slip.

"I've learned that self-interest is the most powerful force in the world. People in unethical, predatory, and nonsense jobs will do mental gymnastics to convince themselves they're doing the right thing. Those who criticize the behavior of  "greedy Wall Street bankers" underestimate their tendency to do the same thing if offered an eight-figure salary."  ___Morgan House

Are You a Tax Evader?

Unless you have a written lease for longer than six months, when you rent your Florida property you are required to collect 6% tax for the State of Florida and the appropriate tax for the county, 5% here in Brevard County. That tax must be remitted with the tax returns by the 20th of every month to both the State and the County. The State has employees who regularly cruise the vacation rental websites like VRBO and Homeaway looking for owners whose properties are being offered for periods of less than six months. If you'd like to come into compliance before you get the nasty letter or phone call, visit MyFlorida.com for state license application and sales tax number. You'll also need to check with your county (Brevard County info here) and city to make sure you're in compliance with everyone. Here is the form for Cocoa Beach. It's a pain in the butt but it's the law.

Locals with kayaks and the knowledge have been catching giant tarpon and monster jacks off the beach in the calm conditions of the last few weeks. A hundred pound plus silver king out of a kayak is an experience not soon forgotten.