Big MLS Shakeup Coming

As of right now, most property listings on the MLS anywhere in Brevard County are visible to any agent or consumer who logs onto BrevardMLS.com to search. It has been this way for as long as the MLS has been available online. When I checked another source this morning, I found that there are three oceanfront condo listings in Cocoa Beach and Cape Canaveral that do not appear on the local MLS but do appear on a distant MLS. How did that happen? Are the property owners aware that Cocoa Beach and Cape Canaveral agents who sell the vast majority of listings here aren't able to see or even know about their property for sale? These three are listed by out-of-town brokers in the Orlando area and posted on their MLS system but not our local MLS. Not good for the sellers. This glitch looks to become more common this summer.

Brevard County has, for some reason, two Realtor associations. We've always used the same MLS system and shared our listings with one another so that an agent member of the Melbourne association could easily see and show listings in Cocoa Beach just like a Cocoa Beach agent could see and show listings in the southern part of our county.

Unless some solution is reached in the next couple of months more Cocoa Beach and Cape Canaveral listings will disappear from BrevardMLS.com. It has always made sense to list with a local broker when trying to sell a property wherever that property is. Should our MLS become divided with some listings only showing up on a distant MLS, it will become crucial for sellers in Brevard County to ask their listing agent whether their listing will be on the local MLS. Exposure on another MLS can't hurt but, if that exposure means exclusion from BrevardMLS.com, for sellers anywhere in Brevard County and especially Cocoa Beach and Cape Canaveral, the impact could be costly. I'm hoping for an eleventh hour solution but it appears right now that the split is unavoidable. I will continue to post sales and listing stats for Cocoa Beach and Cape Canaveral should it become a reality. For me it just means more work. For property sellers, loss of local exposure could prove costly.

"When times are tough and people are frustrated and angry and hurting and uncertain, the politics of constant conflict may be good, but what is good politics does not necessarily work in the real world. What works in the real world is cooperation."  _________Bill Clinton

How Local is it?

All real estate is local. That is certainly true in Brevard County. I get requests almost daily from buyers wanting to take advantage of the distressed market that they've heard about and hoping find a foreclosure or short sale deal in Cocoa Beach or Cape Canaveral. If one looks at the distressed market in Brevard County as a whole (the market that the media typically reports) there are plenty of distressed opportunities. Exactly one quarter, 25%, of all residential listings in our county are either short or foreclosed. If we restrict our search to Palm Bay in the southern end of our county, 35% of the residential listings are distressed. Lots of opportunity there. Now let's cross a bridge and check our possibilities on the beach. In the 30 miles of beach south of Patrick Air Force Base from North Satellite Beach to Sebastian Inlet the distressed ratio drops drastically and is standing at just 9.83% of the total this morning.

Driving north along A1A past Patrick Air Force Base we have the two beachside communities of Cocoa Beach and Cape Canaveral with the Atlantic Ocean to the east, the Banana River to the west and the government owned Kennedy Space Center to the north. The opportunity in distressed property shrinks even more here. Of the 350 total residential listings in the two cities only 8% are distressed. For a buyer looking for a single-family home in either, there are but three distressed possibilities. If that same buyer wants waterfront there are none to see. If he's willing to consider condos, he has a whopping list of 12 from which to choose.

Has our bargain hunter missed his chance? Not really. He does need to reconsider his mindset that bargains only exist with distressed properties. Prices across the board were dragged down when the formerly huge numbers of distressed sales worked their way through the system and are still attractive in many cases. Now that the big numbers of distressed listings have disappeared, there is no dynamic to push prices any lower and we are seeing successive sales creeping upwards. If you're looking to take advantage of the still-low prices, as always, get your pre-approval process handled before you begin your search, do your homework so you'll recognize a deal when it appears and forget about a distressed-only search. Swift action is crucial for those looking for a good property in this market. Conditions will likely change at some point as they always have but, right now, preparation and swift action are among a buyer's best strategies. An informed and involved local buyer's agent will give a serious buyer their absolute best chance at success. AND, this bears repeating, multiple offers are a fact in this market. Calls for best and highest offer in multiple offer situations are common and are not a creation of evil Realtors trying to manipulate single buyers. Withdrawing an offer out of paranoia only gives the property to the other buyer. Adapt and win.

When an archer is shooting for nothing . . . he has all his skill.

If he shoots for a brass buckle . . . he is already nervous.

If he shoots for a prize of gold . . . he goes blind;

or sees two targets . . . he is out of his mind!

His skill has not changed.  But the prize . . . divides him.  He cares.

He thinks more of winning than of shooting . . . 

and the need to win drains him of power.

            – Chuang Tzu, 400 B.C..

First Right Tyranny

 Many condominium associations in Florida and the Cocoa Beach area have provisions in their documents that give members of the association (unit owners) the right to take over a contract for sale of another unit. The way this happens in most cases is that an owner first negotiates a contract for the sale of his unit with an outside buyer. Then the contract is offered to the other unit owners at the same price and terms. In some condos, the contract is mailed to owners and at others a notice or a copy of the contract is just posted on a bulletin board at the complex. The method varies as does the time limit for stating intentions. In most area complexes, owners have between 10 and 21 days to state their intention to exercise their first right and take the contract. If this happens, the original buyer is out and any money spent on inspections and appraisal is gone as well. Not fair but that's how it is.

Should more than one owner want to take the contract we have to go back to the docs to see who has priority. Again, the rules vary and we have several methods for determining priority. Some associations give priority to contiguous or adjacent units with priority usually favoring horizontal over vertical (I did not plan that ironic wording). Others give priority to the closest (numerically) unit number. Most, in the case of a tie, give the seller the right to choose. Acrimony is a not uncommon byproduct.

I have always heard that first right was initially a way for owners in a small community to legally discriminate against unwanted buyers. Should some "undesirable" try to buy in their community, one of the existing owners would just use his legal right to take the contract and prevent the undesirable from buying into the community. In my experience in the Cocoa Beach area that has never been the case. What is more common is that an existing investor owner will take any contract of a desirable unit unless the contract price is well above market. In practice that means that no outsider can buy in the complex unless he is willing to take an undesirable unit or overpay for a desirable one. That situation exists in a handful of units in our area.

Let's talk about short sales in first right complexes. The process can be quite perverse.When a seller of a short sale property signs an offer, the bank/s holding the mortgage must still approve the sale. The question for a short seller in a first right complex then becomes "do I submit this signed but unapproved contract to the association for first right, or do I wait until the bank approves the sale?". If the seller submits to the association before bank approval a couple of different problems can arise. Scenario 1: An owner exercises first right but the bank counters at a higher price than the contract the seller signed. The exercising owner then walks away and seller is back at square one with the original buyer long gone. Scenario 2: No owner exercises and bank counters at a higher price. Original buyer accepts the bank's counter. Because the contract has changed the contract must be submitted for first right again. An owner chooses to exercise their right and takes the contract. The bank refuses to transfer approval to a new buyer which means the short sale negotiations must start over at the beginning with no guaranty that the same price will be approved.

If the seller decides to wait until approval by the lender to submit to the association then other problems are lurking, one almost identical to scenario 2 above. I am involved in a situation like this right now with one of my contracts. The seller signed the original $35,000 offer from my buyer client for a small 2/1 Cocoa Beach condo in early September last year. Bank finally approved the short sale at the $35,000 contract price with $2000 seller contribution in January this year. The contract was then submitted to the association for first right and an existing owner took the contract. The bank refused to transfer the approval and the short sale negotiations had to be restarted. The bank responded in April with an approved price of $51,500 and $7000 seller contribution. That's $21,500 more than the approved amount in January. If we can't get the bank to accept a lower price then this owner/buyer will walk and everyone loses.

If you are a buyer of a short sale in a first right complex, be sure to ask your agent when the first right procedure will take place and be prepared for craziness and an illogical progression of events. Now that I think about it, you probably want to know, short sale or not, whether the unit you're offering on is in a first right complex. It might prepare you for the possible disappointment. Whatever your situation, may the force be with you.

"Animal Sounds"; "Condiments"; and finally, "Your Ass or a Hole in the Ground". Mr. Reynolds, unfortunately you're in the lead, so we'll start with you. __Alex Trebek as played by Will Ferrell

Moving Right Along

What a month April was. As of this morning the Cocoa Beach MLS is showing 67 MLS-listed condos and townhomes and seven single family homes closed in April in Cocoa Beach and Cape Canaveral. Only one of the 67 condo sales was a short sale. Eleven were foreclosures. Two of the seven single family homes were short sales and none were foreclosures. That puts the percentage of closed distressed sales in April at 19%. Only 8% (30 properties) of the remaining for sale inventory of 353 properties is distressed (short or foreclosed).

Higher priced properties have been moving with two units selling at the oceanfront Meridian for $685,000 and $725,000. Two units sold at Solana Shores for $425,000 and $455,000. Two other $400,000+ sales closed at Constellation and Harbor Club. Several other complexes had multiple sales in the month. They included the oceanfront Ambassador Shores in south Cocoa Beach, Harbor Isles, Cocoa Beach Club, Ocean Oaks, Stonewood, Spanish Main, The Constellation, Diplomat and the riverfront Treasure Island Club.

One direct ocean home sold in south Cocoa Beach for $1.24 MM. Only one of the 7 sold homes was not waterfront. Riverfront and canal homes sold in a range from $510,000 for a totally remodeled beauty in Snug Harbor to $230,000 for a handyman special on Riverview off 4th Street South.

Competition for good properties remains high. If you plan on getting a mortgage to purchase a property it will serve you well to get the pre-approval taken care of before looking at properties. Any offer contingent upon a mortgage is going to require a pre-approval letter. If you plan to pay cash, you will have to prove that you have the funds to close the deal. Either a letter from your banker stating that you have the liquid funds sufficient to close or an account statement showing sufficient funds will work. Get these items taken care of before offering so that negotiations can move quickly. Also, be prepared to offer quickly if you find a property you like as there are probably others looking for the same thing. Speed and preparation are being rewarded. Lowball offers are not. The days of buying below market value, for the most part, have passed.

"Other prohibitions from the beach ranger ordinance remain unchanged, including bans on drunken swimming, mobile DJ booths, campfires, high-volume drinking devices and leaping off the Cocoa Beach Pier."  Cocoa Beach City Commission

From the Trenches, April Halfway

After blowing the doors off in March, the property market in Cocoa Beach and Cape Canaveral continues at a blistering pace in April. As of tax day yesterday 32 condos and townhomes had closed in the two towns according to the Cocoa Beach MLS. Of those 32 not a single one was a short sale. Three were foreclosures, all under $80,000. Almost half of those sold, 14 units, sold in less than 30 days on the market. There were multiple offers on several.

The high end of the range continues to be strong with two units closing at the oceanfront Meridian for $725,000 and $685,000. A 3rd floor direct ocean unit at the Constellation in south Cocoa Beach closed for $459,900. A 4th floor direct ocean Spanish Main weekly rental 3/2 closed for $323,000. Other weekly rental units closing included two 2 bedroom units at Cocoa Beach Club for $195,000 and $200,000, a Diplomat 3rd floor direct 2/2 that sold for $198,500 and a Royal Mansion first floor 1/1 that sold for $110,000.

In other oceanfront buildings a Marko Villas top floor 3/2 and a Sea Oats 2/2, 2nd floor direct closed for $287,500 and $255,000 respectively. A ground floor Windrush direct ocean NE corner 3/2 with 1623 square feet and garage sold for $193,000. A fully furnished 3rd floor south facing Ocean Oaks 1 bedroom 1.5 bath with garage sold for $175,000. Another one bedroom unit, this one a nicely remodeled 5th floor at Ambassador Shores in south Cocoa Beach closed for $164,000. No garage. A nicely remodeled NW corner facing Beach Villas 1/1 with a nice ocean view in south Cocoa Beach closed for $92,000.

A newer Harbor Isles lakefront 3/2 with 1401 square feet and two garages sold for $152,500. A remodeled top floor corner Treasure Island Club sold for $250,000 after 17 days on market. Three bedrooms two baths, 1827 square feet and open parking.

There were also sales in Rock Pointe, The Saturn, Villages of Seaport, Bayside, Ocean Woods and Atlantique among others. The trend remains the same; fewer days on market, lower inventory, higher percentage of asking price realized and multiple offers for the good ones. As always, cash offers are better received than those with financing contingencies.

I have been and am currently involved in short sales in complexes with first right of refusal. This is a tricky situation. The exact procedure varies but owners in a first right condo complex have the right to take a contract away from an outside buyer and buy it themselves at exactly the same terms as the original contract. This first right offering usually happens as soon as a seller accepts a contract. With a short sale, the seller signs an offer not knowing whether the bank will actually accept the offer. If it is put out to the owners before sending to the bank, an owner exercising their first right might find themselves in a situation with the bank asking for more than the contract. Should that owner accept the bank's counter, in some situations that new contract would have to be put out for first right again.

An even bigger problem involves transfer of short sale approval to a new buyer. If a listing agent doesn't put the contract our for first right until short sale approval is received from the bank, the bank may refuse to allow a new buyer to substituted for the original buyer. In this situation, the first right negotiations with the lender have to start over at square one. I am involved in exactly this situation right now and it is bordering on insanity with all involved losing. I'll cough up the details in a future post after the smoke has cleared.

I've forgotten how to worry
And I don't know how to run
Against the odds I realize
This struggle could be fun!

          __________The Clash

Meet the Buyers

Who's buying in Cocoa Beach these days? The media would have you believe that foreign buyers are buying sizable amounts of property in Florida. While that may be true elsewhere in the state, it's never been true here. Our buyers are, surprise, overwhelmingly Floridians. I looked at the 25 most recently recorded sales on the property appraiser's site which today includes sales between Feb. 21, 2013 and March 20, 2013. As is usually the case, most of those 25 buyers of property in Cocoa Beach last month, six, already live in Brevard County and are buying for reasons other than primary residence. Another five, current residence location unknown, bought for primary residence. Of the remaining buyers, three live elsewhere in Florida and there were two each from Canada and Colorado. Another six were from eastern seaboard states with a last lone buyer from Michigan. Welcome to all our new neighbors.

"“Without music, life would be a mistake." ___Friedrich Nietzsche

Reviewing March 2013

March 2013 was a blockbuster month for residential property sales in Cocoa Beach and Cape Canaveral. Monthly condo sales of 71 units in the two cities tied the highest month since 72 units sold in March 2006. In addition to the 71 condos there were 13 single family home sales. Of the 84 closed sales, 22% were distressed, either short sales or foreclosures. Of the remaining 355 properties for sale, 8.5% are distressed.

Twenty six of the condos sold were in oceanfront complexes with 17 of those in direct ocean buildings. Ten of the closed condos were in riverfront complexes. The highest priced condo sale was a 3rd floor south ocean view Sol y Mar with 3020 square feet that sold for $455,000. There were 13 condo sales for $300,000 or above and 17 for less than $100,000. Three single family homes closed above the $600,000 mark, all riverfront.

The ratio of condos closing with financing is rising with the cash/mortgage ratio for March at 4/3. Our meme of swift action and aggressive offering prices continues to be rewarded. Multiple offers have become the norm again for attractive properties. For buyers wanting a specific property, do not let the dreaded multiple offer scenario deter you. I know it's common to think the seller and their agent are playing games but that fear is just background noise in the grand scheme. Proceed with the strongest offer you're comfortable with and hope for the best. Cash, as always, is more attractive to a seller as it removes all the uncertainty of an offer contingent upon a mortgage. A contract contingent upon a mortgage can fail for several reasons including low appraisal or condo association issues. Issues that underwriters frown upon can include low reserves, not enough cash in the association's accounts to cover insurance deductibles, unacceptable ratios of investor owners and too many delinquent owners to name a few. Then there is the all-too-common occurrence of the lender just not having it all together by scheduled closing date.

All the moving parts of a mortgage conspire to delay or kill the closing. Early in the process there is required documentation from the borrower and the association, then the appraisal and underwriting. A delay of any of these will domino the delay down the line. If you're getting a mortgage it is vital to deliver requested documentation on time and prudent to ask your lender if everything is on track. It is not uncommon to close exactly on time but it is unfortunately not uncommon to have to request an extension because the loan did not receive final approval in time to hit the contract closing date. Sellers should be asking their agent to monitor the buyer's loan progress.

The first big wave of departing snowbirds has taken flight and the flock has been reported moving slowly northward through upper Florida and Georgia. Their places in the sun have been partially filled by wave two of spring breakers who will be gone next week. They will be replaced by the last and smallest wave of out-of-schoolers who will arrive to a mostly deserted town and beach. The third week in April Cocoa Beach will officially roll up the sidewalks and turn off all traffic signals. Restaurants will cut menu prices in half and golfers will be paid $10 per nine holes to keep the golf course in use. The ocean water temp will jump to eighty degrees in just a couple of days and residents will have to start raking jumbo shrimp off the sand every morning before taking the first swim of the day. We don't complain as this just a part of the drudgery of small beach town living post season.

"If you're offered a seat on a rocket ship,

you don't ask what seat. You just get on."

_____________________Eric Schmidt

Balcony collapse Villa Verde South Cocoa Beach

4th floor NE balcony collapsed this afternoon 4/1/2013

It just folded onto the 3rd floor balcony

Early reports say no injuries