Optimistic Bankers

US temps 12-11-2103

I made a quick mention in the last post about the trend in asking prices for foreclosures. The recent trend has been towards higher and less aggressive asking prices. In the not too distant past, most foreclosures in the Cocoa Beach and Cape Canaveral market would have multiple offers within the first few days after hitting the MLS and would usually sell for full or above asking price. That is no longer true. The buyers have given a collective Ho Hum to the banks' recent optimistic prices and many attractive foreclosure properties are not getting quick offers. Of the 23 bank-owned condos on the MLS this morning, 11 have been listed for longer than a month and 9 have reduced the original asking price, one by 24%, still without a sale. Five of the 7 short sales currently active have reduced their original price.

Our takeaway: just because it's a distressed sale doesn't mean the asking price is a deal. Know the current value and offer accordingly. As always, knowledge is power.

""If you can't fix it with a hammer, you've got an electrical problem." ___unknown

Where Are We Right Now?

It seems just yesterday that I was writing the year-end wrap up for 2012 in Cocoa Beach and Cape Canaveral and commenting on the record-breaking number of sales. We still have the month of December to go and we've already exceeded 2012's numbers with 623 MLS-listed condos and 116 single family homes closed so far. Inventory numbers have increased recently but after we remove the noise of the pre-construction listings and the way-overpriced, been-on-the-market-forever listings we have about a five month supply of properties for sale at the current sales rate. The MLS shows 310 condos and townhomes for sale this morning with 55 of those having been listed for over a year. Most everything that's been for sale for over a year qualifies for my "not really for sale" designation for obvious reasons. There are 31 short sales and foreclosures among the 310 units for sale including a 4th floor Meridian asking $649,900. The banks' asking prices for foreclosures have crept up into the meh range and many of the foreclosures are languishing on the market as a result. There are only a few of the 31 distressed sales that I would consider a "great" deal.

Here's an excerpt from a post exactly one year ago. The sentiment expressed persists.

"I had an interesting conversation with a prospective buyer last week. Among his criteria was "being able to take advantage of the poor market conditions in the area in terms of significant below market pricing and leveraging the fact that he'd be paying cash". "Poor market conditions"? The current market would be better described as en fuego (see the previous post). "Significant below market pricing"? I'm not aware of any sales happening at significantly-below market prices. Buyers are standing by ready to purchase good properties when they're priced at current levels with over half of them paying cash. I suspect this particular buyer is going to be looking for a very long time unless he modifies his expectations."

The song remains the same. Buyers with specific criteria are having to search for months in many cases for the right property. Those with popular criteria like direct ocean condo above the ground floor sub-$300K (5 available today) or canalfront home under $350K (3 available today) can expect competition when a good unit hits the market. Buyers, be patient and ready to move quickly when a desirable property surfaces. Even though we have moved off the bottom, prices have not run away. Deals exist for the persistent. Those seeking a mortgage would be advised to start the process before starting the search. A note about  search criteria. Don't trust descriptions in the MLS to be accurate. I searched for oceanfront condos above the ground floor with a front door facing west asking less than $300,000. The results included two Conquistador units in the building across the street from the ocean and seven others with balconies facing either north or south. Some actually had doors facing west with balconies facing south but some others were just incorrectly described. Maybe inadvertently. Maybe not. The internet is great for buyers doing their own searches from afar but nothing beats boots on the ground here and local knowledge. If you need those boots and knowledge, contact me. My motto; No BS.

Denver this morning is at zero degrees with an expected high of 16. We are forecast to reach 77 under clear blue skies with a light SE breeze. Offshore fishermen are catching sailfish in decent numbers and some pompano are being caught in the surf. Conditions are ideal for both at the moment.

The photos are of  Tuesday's launch of the Space X Falcon 9 in it's first mission to deliver a commercial satellite to geostationary orbit. The new kid in town makes a big statement with this mission.

"I always tell people, the first $500,000 is the easy part of the deal. The deal will come apart over nickels and dimes." ____Mike Jaquish

Fool Me Once

NOTICE: We've had some major email disruptions in the past month and I have not received all mails. If I haven't responded to a recent mail, chances are, yours was one of the lost ones. Please resend to the hotmail address in the header of this blog and I'll respond immediately.

What can I believe when looking at real estate listings online? I spoke with someone yesterday who noticed a listing that was previously under contract had just come back on the market at Realtor.com. When I researched the MLS history it showed as still under contract and continuously so since the end of October. So, why did Realtor.com show it as back on the market? The only thing I can figure out is that when the listing agent changed the status from "contingent" to "pending" it triggered a status change which conveniently and incorrectly defaulted to "active/for sale" status rather than "under contract". More page views = more revenue. None of the major non-MLS real estate sites can be trusted to be up to date and accurate. Actually, nor can BrevardMLS.com, but, it is the most accurate by a mile.

The errors on BrevardMLS.com are mostly related to agent errors or circumstances, not a policy intended to boost page views. Foreclosure listings often remain active for a few days following acceptance of a contract because the banks are slow to get all the paperwork signed and delivered. Short sale listings are sometimes left in active status for months even though the seller has accepted an offer that is being negotiated with the bank. Sometimes a listing agent will mark the wrong area by accident. AND, some listings marked as "waterfront" may be a looong way from the water. There are two active listings this morning that are designated as "waterfront/ocean" that are over a half mile from the ocean. The condo project that they are a part of extends to the ocean so these listings are allowed to be tagged as oceanfront even though some units are as far as 3/4 mile from the beach. The units here are nice and the prices reflect the distance but the "oceanfront" status is misleading.Your agent can fill you in on the details of any too-good-to-be-true listing.

For buyers looking for listings with specific criteria, the best way to be on top of the accurate data is to have your agent set up an auto-alert directly within BrevardMLS.com with whatever criteria you desire. The system will send you an email whenever a new property with your criteria is listed or an existing listing has a price change. The mainstream for-profit real estate sites can't match the timeliness or accuracy of the source. I'd be happy to set up an alert for any readers without one.

When the axe came into the woods, many of the trees said, "At least the handle is one of us."  __Turkish proverb

10 More Questions

Do agents lie about multiple offers? - I've written about this before. It seems to be universal among buyers to believe that the listing agent is always lying when she says she's received another offer. People, it just ain't so. It probably has happened somewhere but there is absolutely no need for a listing agent to make up a story about another offer in hopes of getting a slightly higher price. (see next question) The chance of chasing off a distrusting buyer is too great. Buyers, if you receive a call for your best and highest offer because of the existence of another offer, don't shoot yourself in the foot by withdrawing. If you wanted the property enough to place an offer in the first place, at the very least, stick with your original offer. It's your call if you want to sweeten your offer.

Do agents try to influence higher price for greater commission? - Not likely ever true. There seems to be a belief that agents, buyer's and seller's, want a higher price in order to get a greater commission. The math proves this one wrong. Even if either or both agents were able to influence a price up by $10,000, each agent's check would increase by a couple of hundred dollars in most cases. Not worth the risk of losing a deal for a couple of Benjamins.

Don't both agents work for the seller? - Absolutely not. The seller pays all the commission to their broker in most cases who shares part of it with the selling broker. Even so, as a buyer's agent, I am working solely for my buyer's best interest. The only exception to this would be when the buyer's agent is also the listing agent or when the listing is within the same brokerage as the buyer's agent. This is a persuasive argument for not using a buyer's agent from a company with a lot of listings in the market the buyer has targeted. A buyer's agent showing one of her company's listings is prohibited by law from advocated on behalf of the buyer. She must remain neutral, honest and fair. I, as a buyer's agent from another company, am not so restrained. In fact, I am bound to fight for my client and to use all fair means to get the best possible deal. Remember that when thinking about contacting a listing agent directly. It is rarely in a buyer's best interest to deal directly with the listing agent even if that agent is willing to concede part of the commission. See the next question.

Can't buyers get a better deal by dealing with the listing agent? - Not usually. As I explained above, the listing agent can't advocate for the buyer. While she may agree to shave off a percentage point for getting both sides of the deal she is prohibited from telling you, for instance, that your offer is $10,000 more than the seller countered my client last month in his failed attempt to buy the house. Think I'd let you make that too-high offer? Not.

Do agents not show buyers all listings? - sometimes. With the public able to view all listings on the internet, a buyer is able to do her own research and to find attractive listings that appear to match her criteria. When her agent doesn't include one that she has found on her own she becomes suspicious that her agent is either slack or deliberately excluding listings. Both may be true. The most likely reason a listing is excluded is that the agent has seen the listing and is aware that the MLS photos are misleading and the property is not what it appears to be online. It's amazing how many of the beautiful ocean view photos in our local listings are not the view from the unit. I get scores of inquiries about amazingly low prices on units with gorgeous open ocean views. What is usually the case is that the view in the listing was shot by Spiderwoman listing agent hanging off the side balcony shooting 90 degrees to the side with a zoom lens to exclude the huge timeshare building next door. As an active market participant here, I know that but to a prospective buyer in Fresno viewing it on awesomecondos.com, it looks like a steal for $199,000.

Then there are all those already sold or under-contract listings that still show up as "for sale" on the big real estate websites. There's a reason those websites are slow to remove a sold listing. It's called advertising revenue. Do your searching at BrevardMLS.com. It's the only site you can trust to always be up to date.

Do agents show only (or favor) their own company's listings? - It's very unlikely that an agent in our market would show only her company's listings considering the very low inventory right now but I can certainly see an agent favoring her company's listings. Brokers sometimes offer additional incentives for selling an in-house listing.

Do listing agents try to get sellers to sell too cheap? - Possibly. A hungry or lazy listing agent might encourage a seller to list too low or to accept a too-low offer in the interest of getting a quicker check. More often than not, an offer the seller thinks is too-low is right in the fair market value range. A good agent will always encourage a seller to accept a fair  offer even if the seller thinks it's too low. Sellers almost always expect to get more than their property is worth.

Won't "For Sale By Owners" net more money than sellers using a listing agent? - Sometimes, but for reasons one might not expect. A FSBO will not be paying a listing commission although they sometimes are willing to pay a buyer's broker. What is definite is that they are not planning on giving the commission savings to the buyer. They didn't forgo the convenience of having a listing agent in order to give a buyer a better deal. No, sir. The intention is to pocket more money. That same mentality is why so many FSBOs are overpriced. Match those sellers with a buyer enamored with the idea of buying without a Realtor and you have a recipe for an above fair value sale. Buyers, do your homework. It's not about the commission. It's about the final price. 

If a seller cancels a listing, do they pay a fee? - Sometimes but usually they shouldn't. A listing that requires expensive marketing and effort should carry some sort of cancellation fee to recoup expenses in the event that a seller prematurely ends the listing. Most listings should not carry a cancellation fee. A seller who doesn't like her listing broker should be able in most cases to cancel the listing with no penalty. This is not a popular opinion in the business but it is mine. Make sure you know if your listing contains a cancellation fee before you sign.

Are real estate websites a good way to find an agent? - Sorry, no. Agent reviews on all of the big online real estate sites are suspect. They are predominately and suspiciously positive. Beyond the reviews, any agent can throw money at these sites and establish a big presence. Big online presence does not guarantee competence or performance. This is doubly true for an agent's own website. If you're looking for an agent to represent you as a buyer or to list your property, talk to a few. Lacking a recommendation from someone you know, your gut perception is your best tool for selecting an agent to represent you. A little skepticism will serve well. We're not all crooks regardless of public perception.

Charlie don't surf. We really think he should. __The Clash

Sold Condo Price Ranges

Price ranges of sold oceanfront condos in the last two months:
Side view and partial ocean view units have been selling mostly in a range from $150 to $205 per square foot with the average at $170/sf. The higher range has been represented by units in buildings in good repair and/or remodeled interiors. Side ocean view units bringing above the average were in buildings including Artesia, Stonewood, Windward East, Royale Towers and Sandcastles.

Direct ocean units above the ground floor with unobstructed views have sold in a range of $196 to $281 per square foot with an average of $235 per foot. I did not include in the average the two highest sales at the Meridian which sold for $313 per square foot and the low which was a 1/1 at Triton Arms downtown Cocoa Beach with no garage that closed for $172 a foot. Like the side view units, units in well-maintained and/or newer buildings commanded the higher end of the range. Those included Michelina, Meridian and Solana Shores.

These averages and ranges are a good starting point for trying to put a fair value on a unit but they can't be definitive because of the many variables among the sold units. For those looking to buy or sell, it makes sense to be realistic about all the conditions affecting valuation. An otherwise identical unit that is not remodeled can't be expected to fetch the same price as the neighbor's remodeled unit. Garages, contents, age of appliances and AC systems, quality of view, existence of shutters, etc. all affect value and should be taken into consideration.

For units yet to be sold/purchased, there are constants, however. In almost all instances, sellers will expect their unit to command top of the range or beyond regardless of condition. This is especially true at present as prices have been moving up. Buyers on the other hand will be seeking to pay at the bottom end of the range or below, again, regardless of condition. When offering, including well-researched comparable sales with adjustments for variables, will go a long way towards bridging the gap between the opposing desires. Throwing a lowball offer without good justification is a waste of time. Likewise, a listing asking 20% above recent comparable sales better have some believable rationale if they expect to sell. If you're buying or selling, do your homework and be prepared to prove the case for your number. The comps are available for everyone. As I've said before, the Property Appraiser's and Zillow's estimates of value are not to be take seriously.

Somehow, even with our depleted inventory and abundance of unrealistic sellers, 50 condos and townhomes closed in the month of October in Cocoa Beach and Cape Canaveral. There are 282 units for sale this morning with 9% of the total distressed (short or foreclosed). We look to easily exceed last year's record sales of 612 units making 2013 the biggest year for number of sales since 2005. I'm not sure what next year will bring but I think it's safe to say that prices will be higher and inventory will continue to be in short supply. New mortgage rules and flood insurance uncertainty will both impact buyers hoping to finance a purchase. Cash will almost certainly continue to dominate the closed sales.

"My definition of art used to be narrow. Now, I consider anything that conveys intent to be art. It's a wide open door, I feel no anger towards stuff that's obscure. There's far too much effort put into things that are downright backwards and evil to harbor any ill will toward artists." unknown Redditor

Market Follow-up

I thought I'd follow up the previous post with a little more detail about the current state of the Cocoa Beach housing market including details about the year to date stats. As of this morning, October 28, 2013, a total of 577 condos and townhomes have closed in Cocoa Beach and Cape Canaveral year to date according to our MLS. As always, because we enjoy the company of a good number of slack listing agents, the actual number is almost certainly higher. Of those sales reported, 59% or 343 units, closed for cash. That trend remains in place so far in October. Of the closed sales so far in 2013, 23% were either short sales or foreclosures. That ratio has been steadily dropping since we peaked in 2010 with over half of all sales that year distressed. Current inventory is only 9% distressed.

The for sale inventory is not exactly what it seems at first glance. The number of units for sale has increased to 275 but that includes 24 units not yet built. Those unbuilt include 16 in a proposed Puerto del Rio building on the river in Cape Canaveral ($299K to $399K) and 8 at Cocoa Cabanas ($699K to $899K) on the ocean in south Cocoa Beach. The market may have recovered enough to get one or both of these buildings out of the ground. Of the inventory in existing units, 97 have been for sale for over 6 months with no takers. That suggests unrealistic price expectations. Exclude those over-priced units and the units not yet built and we're left with 154 total units that are available for a buyer looking in our two cities. Filter that small number with individual buyer criteria and the task of finding a suitable unit becomes daunting.

In a purely anecdotal observation, we feel to have returned to our seasonal cycle (slow fall, busy spring) that was upended during the crash and years following. If that is the case, we should expect to see a decent number of new listings after the holidays. I certainly hope so. In the meantime, air temps this week have been in the 70s and 80s with clear blue skies and the surf temp is holding right at 80 degrees. Spanish mackerel are abundant in the surf blasting the billions of glass minnows. Tie on a small diamond jig or similar small lure and a surf fisherman can catch as many as his heart desires. See you on the beach.

"You know, music really isn't supposed to be perfect."  ___Tom Petty

State of the Market Oct 2013

As we approach the end of another record setting year for property sales in Cocoa Beach and Cape Canaveral we find ourselves at an interesting point in the recovery. At the peak of the boom in 2005, 805 condos closed in our two cities. Just three years later the number of property sales bottomed with only 371 condo sales that year. Prices continued to decline through 2009 and 2010 for most market segments and neighborhoods even as the number of sales was increasing. We saw 612 condos close last year and are already at 561 so far in 2013.

The price decline began slowing around 2011 for most properties and prices have been steadily inching upwards since. This is due in large part to the steadily decreasing number of available foreclosures and short sales. Of the 612 closed condos last year just over a quarter were either foreclosures or short sales. Compare that to the 25 total foreclosures and short sales available this morning in Cocoa Beach and Cape Canaveral.

Our condo inventory for sale has been hovering between 250 to 270 units since the middle of the summer. That's half what we had as recently as 2010. This hyper-low inventory means that there are not enough priced-right listings for the interested buyers. A big part of this is the large percentage of the properties for sale that are wildly overpriced. Many of the new listings are sellers who were waiting for the market to turn around before putting theirs up for sale. The market has definitely turned and is heading up but not nearly at a rate to justify the prices I'm seeing. The current scenario is unlikely to give many of these sellers their dream  prices.

For those of you looking to buy, now more than ever, you need to know what represents a fair price for the property you're looking for. Accept that you are not going to be able to purchase for last year's prices in most cases but be informed enough to be able to recognize the crazy over-priced listings. No need to get angry at the sellers who have unrealistic expectations. They are not trying to rip you off. They are just misinformed and in need of a reality check. Sellers, please have your agent do a current comparative market analysis for your property and price it accordingly IF you really want to sell. We expect you to price it above what you're hoping to get because you know that the buyer is going to expect to get it for less than asking. That's all part of the game. Buyers, forget the average selling price to last asking price ratio. Just because the average sold condo in September sold for 92% of last asking price doesn't mean that the one you want should sell for that price. You're not buying an average. You are buying one property and you should know what it's worth and what you are willing to pay to own it. Knowledge, it's not just for nerds

Cipolla's second fundamental law of stupidity:
2. The probability that a certain person (will) be stupid is independent of any other characteristic of that person..

October So Far

I had to repost the pic of the flowering Spanish Bayonet in my backyard. The speed at which the flower spike is growing is incredible. It's averaging around a foot a day.

The number of property sales in September in Cocoa Beach and Cape Canaveral was less than in any of the summer months but still exceeded any September since 2005. There were 49 closed condos and 6 single family homes. October has begun slower yet with only 13 closed condos and townhomes recorded as of this morning. Sales have ranged from $240,000 for a top floor south ocean view Sandcastles furnished 2/2 with garage to $66,000 for a small Cape Canaveral townhome. Listing inventory remains at a severely depleted level and decent properties that are priced right are scarce. Buyers in this environment must be patient and expect competition for the good new listings.

As usual in October, our streets and restaurants are pleasantly uncrowded and the air temps have cooled below the 90s. The water temp in the surf is still in the low 80s and we've enjoyed a persistent small swell for weeks. A few advance scouts for the gathering hoards of snowbirds north of the Mason-Dixon have been spotted although the full invasion is still a couple months off. It's a good time to be in Cocoa Beach.

"Non-stupid people always underestimate the damaging power of stupid individuals." ____Carlo Cipolla