Better Best and Highest

The seemingly missing comma in the title is not an error. Read the last part of this post and it will become clearer.

Halfway through July and property sales in Cocoa Beach and Cape Canaveral are ticking along at a heated rate. Of the 26 reported closed condos and townhomes so far in the month two went for more than a half million, both at Michelina, $600,000 and $575,000. Another high sale was a 2nd floor northeast corner at Villa Verde in the same stack as the collapsed 4th floor balcony in April. It has 3 bedrooms 3.5 baths, 2512 square feet, 2 car garage and closed for $395,000.

Shorewood in Cape Canaveral has been active with three closed sales of non-direct units at prices between $202,000 and $245,000.

One of the last bank-owned Pier Resort units closed for $170,000. Side peek of the ocean with three bedrooms, three baths and 1900 square feet.

A 2nd floor Diplomat 2/1, 750 sf with mild updating sold furnished for $116,000.

Two Bayport villas in Cape Canaveral closed for $205,000 and $240,000, 1507 and 1686 square feet.

A 2nd floor Royale Towers south facing C building 2/2 closed for $202,000.

The highest closing price since 2005 at Beachwalk on the grand canal on Banana River Drive in Cocoa Beach happened this month. A 2nd floor 2/2 closed for $190,000. It had a boat slip with lift and a garage. Several direct water units similar to this have sold for under $150,000 in the last three years. A ground floor direct with boat lift closed in January this year for $128,500. This same story is being repeated at most complexes as prices are ratcheting up with the evaporation of distressed inventory.

Let's revisit multiple offers. I had an interesting encounter with a buyer last week who thought multiple offers should include multiple chances to do "best and highest". It doesn't work that way. Typically in our market, if more than one offer is received at the same time, the listing agent will go back to all buyers' agents and give them the opportunity to bring their best and highest offer to be presented to the seller at the same time. This is risky for the seller as the pervasive distrust of real estate agents means that they run the risk of losing one or all of the buyers. I was involved in one situation where both buyers withdrew their offer when asked to bring their best and highest. The condo ultimately sold to an entirely different person for less than at least one of the first buyers was willing to pay. If your buyer's agent tells you that the listing agent has called for "best and highest" because there are multiple offers, you have three choices.

1. keep your offer exactly the same in hopes of being the winning offer
2. increase your price and/or better your terms in hopes of being the winning offer
3. withdraw your offer because you "don't play games' or believe the agent/s are lying to you

The seller also has choices of how they want to handle the multiple offers once received.

1. They can accept the offer they like best and proceed to closing. Note that the best offer may not necessarily be the highest. Closing date and terms may win out over price.
2. They can choose not to respond to any of the offers if none are good enough.
3. They can counter one or several of the offers. If none of the prices are acceptable to them they can offer the same counter-price to all and accept the first one (if any) to respond. Or, if one is clearly better than the others, they may choose to counter that one alone with a change of price and/or terms.

How a buyer responds when asked for his best and highest offer is entirely his decision. How a seller responds to the offers she receives is entirely her decision. The buyer I mentioned who was upset with the process was bothered that he didn't get a second chance to better his "best and highest" when someone else made a more attractive offer. The seller chose to negotiate with the offer that she preferred. That offer was apparently good enough that she saw no upside to re-approaching the lesser offer. It was her decision to make. Also note that in the event of multiple offers, a seller doesn't have to call for best and highest. She has the right to choose the offer she likes best without giving anyone a chance to do best and highest.

At this stage of our market, multiple offers are the name of the game for any priced-right listing so be prepared for this if you're offering and don't let it deter you from participation. You decide what price and terms you're comfortable with and then hope for the best. You might win just by staying in the game without changing the offer at all. If you don't trust your agent enough to be honest with him, find another one.

"All journalism is advocacy journalism. No matter how it's presented,
every report by every reporter advances someone's point of view."
_______Matt Taibbi

Larry Walker - larry@southcocoabeach.com  - 321.917.5786

How Not to Sell a Condo

Those who've read this blog for any length of time know from my dozens of tales of misbehavior that a good listing agent is more than a Glamor Shot and a snazzy blazer. As a buyer's agent I find myself across the table from plenty of very competent and able listing agents, some of them many times every year. I appreciate them making my job enjoyable and as snag-free as the system will allow. Unfortunately, I am sometimes forced to deal with listing agents who occupy a much lower position on the competency scale.

A listing agent is employed by property owners to sell property. Once hired, if the listing agent is not doing her job well, there is not a good way for the seller to know that. If there's a sign in the yard and the listing is on the internet she's doing her job. Right? Maybe not. No offers? Maybe the market is just not interested in your property OR, maybe, the agent doesn't answer her phone or respond to messages or emails. No showings? Same answer. How's a seller to know? Here's a timeline of a recent encounter with a slacker of a listing agent whose listing my client tried to purchase. Note that often sellers may be hard to reach and responses can take days. Good listing agents will relay the reason for the delay and try to keep the prospective buyer's agent informed along the way in hopes of eventually putting a deal together. That didn't happen this time. This is how NOT to handle an offer.

June 15 - mid-morning - I call the listing agent of a half-million dollar oceanfront condo to ask some questions about her listing. My clients who I've shown the unit to twice are interested in making an offer. The recently sold comparable units don't support the asking price so I'm making the call to discuss the unit and find out if there are non-public comps or details about the unit that would justify the higher asking price. She doesn't answer and I leave a message. There is still no call-back by late afternoon so we go ahead and prepare an offer based on our research of the nearby, recently sold units of similar size and condition. The comps suggest a price of about 90% of the asking and we offer accordingly. I email the offer to her and ask for confirmation of receipt.

June 16 - early morning - I have received no call-back or email so I email again asking if she has received the offer. Living here in the home of manned space flight, the practice of redundancy is firmly ingrained in most of us so I fax another copy to her office, just in case. No response so I call again at 9:30 and leave a message that I had emailed and faxed the offer. She calls late afternoon to confirm her receipt and said she'd present our offer to the seller that night and get back to me.

June 17 - no communication from agent

June 18 - she calls and apologizes for the delay and says she will get the offer to the seller "today". I don't mention that she told me two days ago that she was presenting then.

June 19 - I call and ask if the seller had a response to our offer. She says she is getting with him at 9:30 AM "today" (not the other "today" as promised) and will have a response for us shortly after. Nothing from her after that.

June 20 - Still no word from the agent but I have heard about another unit not yet listed on the MLS that seems perfect for these clients. I make arrangements to see the other unit.

June 21 - I email our MIA listing agent again asking if any word. No response.

June 22 - We look at the unlisted unit, love it, make an offer and reach agreement that afternoon. No contact from the first agent about our now seven day old offer all day.

June 23 - Still no word from the listing agent.

June 24 - 11AM email from the listing agent saying the seller has countered our offer from nine days ago and encourages me to have my clients respond to his counter. I let her know that we have another unit under contract and thank her for her tireless efforts.

Think this is uncommon? Think again. Choose your listing agent carefully. For the record, so no innocent Cocoa Beach listing agents are suspected, this was an agent from further south who has no listings in our two cities, thankfully. Oh, and for the sellers of the three Cocoa Beach and Cape Canaveral condos this morning that are listed by Orlando brokers and appear only in the Orlando MLS and not on the local MLS, good luck finding a buyer. Most of the local buyer's agents aren't even aware that your units are for sale.

Well I guess it ain't easy doing nothing at all oh yeah
But hey man free rides just don't come along every day
____The Offspring

Hands Up and Kick the Checkbook Over Slowly

A one-week move of over a half percentage point in mortgage rates caught everyone's attention this week, especially prospective mortgage borrowers. Freddie Mac reported that the average 30 year fixed rate mortgage increased from 3.93% to 4.46% between June 20 and June 27. That's on top of a similar increase already pressuring mortgage applicants since May 2 when the average rate was 3.35%. In the real world that translates to a monthly payment today for a $250,000 mortgage that's $159 higher than just seven weeks ago. A borrower getting a $250,000 mortgage at today's average rate will pay $1908.000 a year more interest than a borrower of the same amount at the average rate in early May.

Will rates continue their upward trend? No one knows but opinions are abundant. I would normally say do your homework and trust your gut but, in this case, the forces moving rates are too big and complex for a peasant like me to comprehend. Time will tell. In the meantime, inventory of condos and townhomes in Cocoa Beach and Cape Canaveral is back down to 275 total units after briefly getting to 330 units earlier in the year. Median asking price is $210,000. Distressed sales make up 9% of those 275 units with only three of the distressed units asking over $200,000.A total of 52 units (12 distressed) are recorded as having closed in June. At that rate we have but a 5.29 month supply of units for sale.

There are 59 single family homes currently for sale in our two cities with a median asking price of $350,000. Only five are distressed with the highest asking price of the five at $289,900. Nine single family homes are showing as having closed in the month of June. None were distressed.

We are firmly in our usual summer pattern of afternoon thunderstorms and calm ocean waters. Temps have not been unbearably warm and the fishing has been good. As is always the case in summertime, the Cocoa Beach Country Club golf course is wide open, uncrowded and cheap. Tee times unnecessary. We haven't had decent sized waves for a while but there has been a constant small background swell keeping the kids and longboarders satisfied. I'll see you outside. Stay hydrated and don't forget the sunscreen.

Short Sale Negotiators on Acid

I promised I'd share the final chapter in the crazy short sale story I began earlier this year when it finally concluded. As crazy as it was then it got even more bizarre before blowing up in spectacular fashion this week. The story of the short sale on acid is now complete and follows. I'll start back at the beginning for those who may have missed it.

The short sale one bedroom, one bath Cocoa Beach condo was first listed on April 27, 2012 for $49,999. The seller signed a contract on May 4 but that buyer backed out three weeks later. The seller signed another offer for $35,000 from my client on July 7 and the signed offer was submitted to Wells Fargo to start the short sale approval process. Wells finally approved the short sale at the $35,000 contract price with a $2000 seller contribution and release from deficiency in January this year. The contract was then submitted to the condo association for first right of refusal and an existing owner took the contract away from my client. The bank refused to transfer the approval to the new buyer and the short sale negotiations had to be restarted. At this point I suggested to the new buyer that the approved price might not happen again and if it didn't then all the other owners would lose. She was willing to take the risk for them (without asking them, of course) and would not back away and let the first buyer close.

The title company negotiating the short sale resubmitted the new contract and the bank responded in April with a new, increased approved price of $51,500 with $7000 seller contribution. The new buyer responded by upping their $35,000 to $35,100. The bank responded with a request for the buyer's highest and best offer accompanied by three recently sold comparable properties. The buyer provided comps and upped their offer to $37,000. This was April 24.

Wells Fargo responded this week with their take it or leave it offer. They now want $63,000 from the buyer and want the seller to sign a promissory note for $131, 828 payable at $1098.57 per month for 120 months. In other words, Wells Fargo today wants $157,828 more than they were willing to accept five months ago. Is anyone surprised that these guys needed bailing out because of bad decisions?

Here's the easy to read timeline:
April 27, 2012 - condo listed as short sale for $49,999
May 4, 2012 - seller signs contract for unknown amount
May 30, 2012 - buyer cancels contract and listing returns active
July 7, 2012 - 2nd buyer submits offer of $35,000 and seller signs
July 9, 2012 - short sale package is submitted to Wells Fargo
Jan. 21, 2013 - bank approves sale for $35,000 plus $2000 from seller, no deficiency
Jan. 22, 2013 - another owners declares intent to exercise first right of refusal
Feb 5, 2013 - bank refuses to transfer approval to new buyer
Feb 8, 2013 - short sale process is started over with new buyer
April 12, 2013 - bank counters at $51,5000 plus $7000 seller contribution
April 15, 2013 - buyer counters at $35,100
April 23, 2013 - bank declines counter and asks for best plus 3 supporting comps
April 24, 2013 - buyer submits best offer of $37,000
June 10, 2013 - bank counters at $63,000 plus $131, 828 promissory note from seller
June 12, 2013 - buyer declines and file is closed - foreclosure next

Current market value of this unit is around $40,000 to $45,000. I will update on the sold amount when it is eventually foreclosed and sold. Wells Fargo stock is currently rated either buy or strong buy by 18 major analysts. I'm an idiot.

"Insane in da membrane.
Crazy insane, got no brain
Insane in da brain."  ___Cypress Hill

Parsing the Trends For Summer 2013

Let's look at the dynamics of the Cocoa Beach real estate market as we begin the summer of 2013. I'm not seeing any significant shifts away from the trends that were already in place. The most powerful force in our market is the continued decline in the number of distressed sales. Of the 61 condo sales recorded in May 2013 only 16% were distressed. We began the year with 44% of all MLS closed condo sales in January 2013 either short or foreclosed. That percentage has dropped every month since. As these distressed sales have disappeared the downward pressure on prices has disappeared with them and we are seeing rising prices again in almost all complexes and neighborhoods. The sellers who were waiting for market recovery to list their property are finally getting their day although probably not as fast as they hoped. Prices aren't rising nearly fast enough. Our depleted inventory still has a large number of listings at optimistic asking prices by these hopeful sellers. That means that, after discarding the over-priced listings, buyers have very few priced-right attractive properties to consider. That dynamic has the fairly-priced, good ones moving quickly. Price a decent condition Cocoa Beach property near the fair market value and it will sell immediately.

One third of the condo sales in May were on the market for less than 32 days and half of the single family homes sold in less than 35 days. Had the other sellers been more realistic with their first asking price that number would be higher. 59% of  condo sellers had to reduce their asking prices before finding a buyer.

The number of purchases with mortgages is rising. As recently as 2010 two thirds of all condo purchases were for cash. In May we were right at 50/50 cash to mortgage for condos and about 2/3 of all single family sales were financed.

As we move through the summer months I expect these trends to continue. For sellers it means that you can reasonably expect to get more than you would have last year but not a great deal. For buyers, expect competition from other buyers for good properties and expect to pay slightly more than you would have six months ago. Thinking of throwing out a lowball on a good property hoping for a steal? Try some other market. It's not going to happen here. Get pre-approved with your local lender so you can include a pre-approval letter with your offer or have proof of funds if you offer cash. As always, good luck in your search. Questions? Email me at larry@walkerbagwell.com or call me at 321.917.5786 I'm happy to help.

Here's the tl;dr version for those with limited attention spans.

Cocoa Beach & Cape Canaveral Real Estate Trends Summer 2013

• very low inventory
• slowly, steadily rising prices
• shrinking number of distressed sales
• competittion among buyers for good properties
• quick sales of good, priced-right properties
• mortgages becoming more prevalent
• successful lowball offers = DOA

"Money doesn't solve all your problems but it solves your money problems."  __James Altucher

Condo Commandos

Is your condo board of directors acting within the law? Or are they making it up as they go and potentially exposing themselves and the association to lawsuits? I can say with certainty that there is more than one board of cowboy directors in Cocoa Beach that fits in the latter category. It's not uncommon to find condo associations enforcing rules that are in contradiction to the condo docs or enforcing legitimate rules unequally. I've had a condo director tell me that he knew the pet rule he was enforcing was different than the policy spelled out in the docs but that he was doing it for the good of the owners. This same board is also rigidly enforcing occupancy limits that are in contradiction to the docs. No one has challenged so it goes on.

Can't the Board just add a rule changing the pet restrictions in the docs? How about a new rule limiting the number of units one person or entity can own? We must go to the original docs to answer that. "The authority for the board to enact a given rule or regulation must be either expressly authorized in the governing documents or Declaration of Condominium or be reasonably inferred therefrom."

If your board has adopted a new rule prohibiting pets in contradiction to the docs you are under no obligation to find a new home for Spot. The law is specific about a board's authority and the process for limiting uses and rights. Merely adding a new rule to the old rules and backdating the document does not make that rule enforceable and it might expose the directors to liability. Targeting a specific owner through such methods is doubly dangerous. Cowboy directors, if you're reading this, you are encouraged to shape up and follow the rules. If you're in an association with a renegade board, you may want to point them to this post and to this one by Jean Winters, Esq.

"If honesty is the best policy, then is dishonesty the 

second best policy?"  _____Grant Williams

What's Selling in Cocoa Beach?

Tasty pompano from the surf in south Cocoa beach

Almost a month into sea turtle nesting season and but a few days from the beginning of the 2013 hurricane season and real estate sales appear to be slowing somewhat. The Cocoa Beach and Cape Canaveral MLS condo inventory first broke below 300 units exactly one year ago and is still hovering in the same range. The makeup of that plus or minus 300 units has changed somewhat with average prices shifting upwards as the sub-$100,000 supply has been chipped away. Of the 34 units already closed this month, only five closed for less than $100,000. Compare that to the 24 units under $100,000 that closed in May 2012. There was only one sale for more than $375,000 in May 2012. We've had four closed sales so far this month above that number with three of them at or above $500,000.

The priciest condo sale so far this month was a 4th floor SE corner unit at 3800 Ocean Beach Blvd. that closed for $520,000. This unit has 3 bedrooms, 3.5 baths and 2392 square feet. Weekly rentals are allowed in this small 6 year old complex with rents in the $2000 per week range.

Another of the $500K+ sales was one of the pie-shaped, direct river 4/4 Magnolia Bay units. This 3rd floor 3024 square foot unit with a 2 car garage sold for $510,000.

An upgraded 7 year old, 4th floor direct ocean Michelina 3/3 with 2008 square feet and one car garage sold for $500,000.

In the sub-$100 per square foot club a 6 year old, non-waterfront four story townhome with 4454 square feet  in south Cocoa Beach closed for $425,000. It has ocean and river views being in the magic narrow strip of land that is south Cocoa Beach.

One of the big 2434 square foot 3/2 Puerto del Rio units closed for $372,000. It was direct river on the 4th floor.

An east facing Mystic Vistas 4th floor 3/2 with 1686 square feet in the A building sold fully furnished for $370,000. A foreclosed 4th floor 3/2 NE corner  in the D building with an ocean view and 1994 square feet closed for $262,500.

A 3rd floor direct ocean SE corner Beach Winds Cocoa Beach with 1618 square feet sold for $367,500. It had some remodeling and a 2 car garage. In the same building a 7th floor north ocean view 3/2 with 1464 square feet and a one car garage sold fully furnished for $230,500.

A nicely updated direct ocean Driftwood 5th floor SE corner 2/2 with 1118 square feet and some furnishings sold for $268,000. No garage.

A mainly original condition 5th floor north ocean view Mark 3/2 with 1506 square feet closed for $280,000. No garage but does have a carport.

A nicely remodeled ground floor direct ocean NE corner 2/2 Windjammer of Cape Canaveral with 1196 square feet and a one car garage sold for $226,900.

A fully furnished south facing 2nd floor, 2 story Cocoa Beach Club with two bedrooms and 2.5 baths and 1176 square feet sold for $225,000. It has a peek of the ocean over the pool and a carport. Weekly rentals allowed in this complex.

A very nicely remodeled ground floor east corner C building Royale Towers 2/2 closed for $205,000. 1256 square feet and a one car garage.

A direct ocean 2nd floor, 2 story North Triton Arms 2 bedroom 1.5 bath in downtown Cocoa Beach sold for $184,000. It has 1088 square feet and a carport.

Another of the bank-owned Pier Resort units closed for $169,000. It was 2nd floor with 3 bedrooms and 3 baths. There are no more of these units available with the last three under contract yet to close.

A foreclosed 2nd floor direct Banana River Harbor Isles 2/2 with 1308 square feet and a one car garage closed for $167,000. A slightly smaller 1st floor lakefront 2/2 in the same complex sold for $135,500.Next door at River Lakes a direct river 2nd floor 2/2 with remodeled kitchen, 1244 square feet and a one car garage closed for $155,000.

A fully furnished 5th floor south ocean view 1 bedroom, 2 bath Cape Winds sold for $138,000. No garage but weekly rentals allowed.

A nicely remodeled north ocean view 4th floor Twin Towers sold fully furnished for $110,000.

Other sales included three at Costa del Sol at prices between $148,500 for a 2nd floor direct river 2/2 and $86,000 for a ground floor non-waterfront 2/2.

There were two closed short sales at Oak Park on Tin Roof in Cape Canaveral for $150,000 and $160,000. That's half the new price of these units in 2006.

During this same time a remarkable ten single family homes have closed. It's remarkable because there are only 57 left for sale in our two cities. Half of the ten were canalfront in Cocoa Beach at prices between $277,000 and $481,765.

There are 301 MLS-listed condos and townhomes for sale in the two cities this morning. Of those, 26 are either short or foreclosed. Only three of the 57 single family homes are distressed, two short sales in Cocoa Beach and a lone foreclosure in Cape Canaveral.

Turtle nesting has been active in south Cocoa Beach and several dolphin in the 50+ pound range have been landed offshore. Weather has been beautiful and we watched a magnificent rocket launch earlier this week. Overall, a good month so far in Cocoa Beach. If you haven't found your place yet and want to experience what Cocoa Beach has to offer I still have some open weeks in beach rental units this summer starting at $785 total for 7 nights.

Have a safe holiday weekend and thanks to all who have served our country.

"If you're gonna do me wrong, do it right."  ___Vern Gosdin

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