Great News for Sarasota Real Estate

The Today show real estate pundit, Barbara Corcoran, declares that Sarasota is the best market on sale in the nation at this time. Check out the video here.

Short Sales- Here to Stay Although I Wish They Would Go Away

Short sales are up 209% for the first quarter of 2009 over the first quarter of 2008.  Expect 2010 to continue to improve upon this trend. It seems that lenders are realizing (finally) that they can get more money for a property if they just sell it short rather than go through the difficult and potentially litigious process of foreclosure or even modification.  Whether or not I like these types of transactions, they are here to stay.  

The biggest issue I have with short sales right now is how banks are attempting to value the assets that they have collateralizing their loans.  Banks sometimes hire third party companies to help them find agents who are authorized to value property or perform what is called a "BPO" or Broker Price Opinion. These BPOs are usually performed by agents who are inexperienced and work on volume. BPOs are valued generally at about $50 per property. So, the agents who are getting orders to offer an opinion of value are being incentivized to get as many BPOs done as possible with little accountability for accuracy.  Bank ordered appraisers really are not any better- they are usually from out of town with little knowledge at all of the true value the many micro-markets of Sarasota.  I have seen BPOs and bank ordered appraisals off by as much as 35% of the property value.  As the banks continue to try and recoup as much cash as they can from this real estate meltdown, they need to realize that they need to pay top tier agents or LOCAL appraisers to learn the correct value of the asset in question. Since most BPOs are MIA (made as instructed) one can usually expect the value to near listing price. If something is not done about these valuation practices, banks will continue to sell properties for less than they are worth OR deals will die because values come in too high, leading banks on as to the value of the property. 

The solution to this problem is simple- the first thing we need to do revise or repeal the HVCC.  The HVCC is a vile piece of over regulatory legislation that encourages unprofessionalism in valuing property (this is a wholly other rant that will take place later).  If you are buying or selling property that involves financing, you need to know about this.  The second thing we need to do is to hire more professional valuers of property.  As NAR lobbies to correct this issue, consumers need to be aware that ALL transactions, not just short sales will continue to be affected by banks incorrectly valuing real estate.  

As short sales continue to increase in frequency I believe that the current system incentivizes negligence and will continue to destabilize property values. As you are gauging your willingness to participate in a short sale transaction, you should be very aware that the numbers that bank is working off are most likely inaccurate. 

Another RE Blog!

For those of you who follow my posts, you should know that I also am a regular contributor to another Sarasota real estate blog. I just posted a very encouraging blog that you can access by clicking here.

Why I Love Being a REALTOR Part 1

Being a real estate agent in this market is an interesting job to say the least. We all have our theories regarding who is to blame for the mortgage meltdown and the subprime scandals that have been so widely publicized. We are all in some ways hurt by the changes in the market, and these changes have affected REALTORs across the country in a variety of ways. From loss of income, to dealing with short sales and foreclosures, and to taking losses on personal investments, all agents have met their fair share of adversity. I understand this very well and first hand, but can I say to all the negative talkers around the water cooler- "enough already!"  

There has not been a better time to be a real estate agent since 2005. Buyer interest for well priced properties is intense- oftentimes resulting in multiple offers, interest rates are low making money cheap and FHA is revolutionizing the home lending business, and banks have never been more willing to negotiate to sell properties before foreclosure even though these sales are very difficult.  Realistic sellers are telling me that the market is nowhere near as challenging as they thought it would be and buyers cannot believe the values that they are getting on homes.  My personal practice has never been busier!

I am thankful to have a job with flexible yet demanding hours, a great brokerage to work with, and especially to meet all the unique people that I get to serve on a daily basis as they interact with today's market environment. In short, I love being a REALTOR. If you are interested in dealing with someone who is young, energetic, and excited about this market and this business, then you need to give me a call at 941-993-3739 for great service without the grumbling. 

I LOVE SHORT SALES? I think, well maybe...

If you don't know what a short sale is, you might be part of the very lucky minority who is not addicted to CNN.com or any other news clearinghouse.  If you don't know what a short sale is, you might have just decided to bury your head in the sand rather than acknowledge the financial woes that many around the nation and the world are experiencing right now. If you don't know what a short sale is, you might just be living the dream.

A short is sale takes place when a bank allows the seller of a property to sell it for less than what is owed.  With the rapid deflation of the real estate bubble, this is what we are seeing in the market now all to often.  Purchasing a short sale property has huge downsides- long waits on the bank, many banks might not even consider a short sale, reduced commissions for your broker, and frustrating time consuming negotiations with the lender.  Being on the selling end of a short sale is much worse. You might be struggling with an impending bankruptcy or foreclosure, have enhanced anxiety and loss of sleep due to the situation, etc.  

If a short sale is possible on your property, you will most likely end up in a much better place than if you allow your property to go into foreclosure.  As more and more of properties on the market are becoming short sale situations, I have spent the last 3 months adapting myself to that market. If you or someone you know is in a short sale situation, make sure to consult with me. I have built a team of the right qualified professionals who can assist with getting a short sale done much more quickly and painlessly than through other traditional channels.  

A Word About "Foreclosures"

I have gotten many calls lately from buyers wanting to purchase foreclosures. I also recently had a call on one of my listings from a woman who loved the house, loved the price, and when I told her the house was not a foreclosed property, she hung up.  It's official- the most value oriented flock of buyers in recent history are clamoring for something that may not even be worth it at all- the elusive foreclosed property. 

I would like to clarify that buying a "foreclosure" in the literal sense would actually be buying a house that is in foreclosure- a short sale.  Short sales have their own hassles which I will not go into here. So buying a foreclosure is not what buyers want right now, it is buying an REO, which translates to Real Estate Owned.  REO's are also know as bank owned property.  Bank owned properties are often attractive because they can be closed fairly quickly and are offered just at or below market. I do think they provide a good opportunity in some instances, but I think buyers are overlooking other deals just for the sake of buying an REO. Most REO properties need some work and are priced very fairly. Many bank owned properties will receive multiple offers which create a bidding frenzy and play to the banks advantage. I have recently closed on 4 of these properties and I am going to offer a few helpful hints on the process:

1.) Don't Just Sign the Bank Generated Addendum - The BGA is perhaps the most unfair, biased and difficult document out there. According to one attorney friend that I have, no one in their right mind would sign unless they thought they were getting the deal of the decade. Thoroughly review what you are signing. I would recommend retaining legal counsel to help evaluate the document. Whatever you do, just realize that once you sign that document, the Bank is driving the transaction. 

2.) Be Realistic About Timeframes - The Bank will be totally unfair with how long they give you for inspections and they will also charge you a per diem for everyday past closing they have to wait for you to close.  The goal is to close transactions as quickly as possible, but in the midst of this, the bank's closing agents have become backlogged.  The bank can delay things as long as they want without penalty. So, just keep in mind that you could be waiting for a long time. 

3.) Do Your Own Title Search - The Bank will almost always want to pay for the title work and the title insurance policy.  Let them do this to save a little money and keep the process simple. What you should not do is trust their title search to be comprehensive. I have seen some abhorrent mistakes on the title work of these closing mills. Hire someone you trust in the business to help look at the title on the property and also take the time to make sure that the foreclosure was served properly. The original owned of the property could have some recourse on a botched foreclosure. 

Most importantly, make sure you are working with a strong buyer's agent who can align you with the right professionals to further assist and also help work with the bank's agent. Foreclosures can be a good source of opportunity in this market, but not the only source. Proceed with extreme caution and diligence as you consider purchasing a foreclosure. 

Cold Times in Sarasota

Yes, this is frost. Taken this morning in my front yard. Not often do we see this type of cold in Sarasota. Many of my clients from the north are planning escapes to Sarasota to try and shake temperatures as low as -50 degrees in some parts of the country. Despite signs of cold in the air, I do see some indications that the chilly real estate market has some chance of warming up in the near future.  Take a look at the statistics from November 2008 (latest available).  What I see is a strong decrease in inventory coupled with strong pending sales, adding up to near 800 combining single family and condominiums. Add in the best of interest rates, and real estate in this area has not been this affordable since 2001-2002.  

If you are looking for some great deals in the single family home realm, I am really impressed with areas like Laurel Lakes and Laurel Meadows right now. One can secure a very impressive piece of property in the low $300s, almost 3,000 square feet and new construction. Send me an email or give me a call and I will scout out one these deals for you. 

The Best Reason to Live in Sarasota Around the Holidays

This picture was taken Christmas day at about 4pm. The beach was absolutely packed with people enjoying temperatures in the mid 70s.  My family and I went for a walk and watched a beautiful sunset. After being up north for a week before this, I became extremely thankful for the unique holiday experience that Sarasota offers. Instead of white powdery snow, we have white powdery sand! 

Decreasing Inventories

Take a look at this graph- I find it very interesting. This data is for all of Sarasota County dating back to last September.  You can see a clear decrease in properties on the market from a peak of over 13,000 in February to just over 9700 for November. That is an astounding decrease in active inventory (25%!). You can also see a trend in sold and pended homes- a clear increase from 2007.  There might be several explanations for the decrease in inventory- tired sellers, bank foreclosures, etc. But with recent foreclosure numbers showing that in October the number of foreclosures decreased, one begins to wonder how long our endless supply of inventory will last. I am not an economist, and I do not claim to fully grasp the scope of our economic crisis. What I do see is shrinking inventory, and better sales numbers than last year. I don't think I could ask for a better Christmas present. 

Fiery Florida Skies

This is a picture that I took early in the morning before the last cold front swept through West Florida. Those ominous skies gave way to a very strong front sparking tornadoes in many areas. Winter is a fascinating time of the year in Florida...  

Moratorium on Home Buying Created by the Fed?

In the government's latest move, the FED is considering measures to curb mortgage interest rates to 4.5% for new home buyers and new residential loans.  Click here to see the article.

As a real estate practitioner, I see the short term impacts of this as nothing short of devastating. Until the FED makes a final decision on this, buyers will most likely remain on the fence only considering cash purchases for the most attractively priced properties. If I can calm myself down enough to be patient and think about the long view, perhaps there is an upside to all this.  The FED is on the right track, however they are still missing the mark. Where the aid really needs to be directed is to those who are in homes now that they cannot afford and to those who are losing confidence as they make payments on an asset that is worth pennies to the dollar on what they owe.  A more sensible plan would focus on underwriting banks and sponsoring a program so that troubled borrowers can refinance their current homes to lower rates. This would free up hundreds of dollars per month for the average American, stimulating the economy from the housing sector to professional services to retail etc. In the meantime, most American industries continue to suffer until final and decisive action is taken. 

Another Great Winter in Sarasota Tradition

Believe it or not, there is a large surfing population in Sarasota. Today was one of those classic Sarasota days with lots of cold surf to go around. Most winter storm systems bring fresh doses of cold, sunny waves to the Gulf Coast, much to rejoicing of surfing enthusiasts across the area.

By the Way, Have You Seen the Mortgage Rates?

If buyers did not have enough incentive, take a look at what the 30yr interest rates have done over the past month. If you can find a bank to lend you money, the time has never been better to buy. This is the perfect storm!

Coldest Start to Winter I Can Remember

This winter is off to a blustery start. I am always amazed at how quickly the Gulf of Mexico can change temperatures from almost 90 to 65 degrees.  I can remember many beach days in December and warm Halloween nights trick or treating in Sarasota. Not so with this year. I would expect all our friends from the North to want to visit and stay a while this year. 

If tanning on the beach in 5o degree weather is not to your liking, there are several things to consider doing in Sarasota in cooler climates. One of my favorite winter and spring traditions in Sarasota is the Season of Sculpture.  If you were wondering about the large statue near Marina Jack's you can learn more here: http://www.sarasotaseasonofsculpture.org.

Enjoy this magical time of year in Sarasota and don't forget to take advantage of all our great seasonal attractions. 

A Study on Housing Slump Recoveries- Housing is Quick to Recover

It is fairly obvious that we are a challenging real estate market that is mired with inventory. Most Americans fear that we are in a recession and inflation is running rampant. These facts are certainly troubling to a real estate professional and leave many searching for answers. I have been studying the housing slumps that have taken place in the last 50 years, and all of them share some strong commonalities. All downturns usually precede a recession, and all recoveries seem to be quick.
There have been 6 major housing slumps in the last 50 years. Perhaps the most severe took place in 1980-1982. While housing starts fell as much as 30% during this time, they increased 30% from prior levels within the first three months of the recovery. This trend repeats itself in the downturns of 1969-1970, 1973-1975, 1980-1982, 1990-1991, and in 2000-2001. In each scenario, housing starts increased dramatically during the first three months of the recovery. There is no disputing that this housing market slump may be the worst in 50 years, but if history repeats itself, when recovery comes, it will come quickly. One reason to expect a vigorous return to activity is the standstill that housing starts have come to nationally and locally. Builders take their cues from the economy and consumers, which by definition causes their business to be cyclical. They expand and overbuild to meet demand and they must contract and ride out the glut of inventory that they have created.
According to the Joint Center for Housing Studies of Harvard University’s report for 2008, “demographic fundamentals still point to increased housing demand over the next decade. But the excess inventory must be worked off before the demand for new homes rebounds. This in turn requires a return to stable to rising home prices, sustained job growth and accessible credit. When that happens… the inventory overhang will start to thin, prices will firm even more, and average annual production… will likely head back toward [normal levels].” Luckily, this study is based on a national level. The Sarasota market continues to show stability as the most robust market statewide. While we have a way to go, here’s to hoping that history repeats itself once again! The bulk of this segment was taken from the JCHS of Harvard University’s report for 2008, which was given to me by a client and friend.