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.

Irrational Apathy

Many have referred to the past FED leader Alan Greenspan's well spoken moniker of "Irrational Exuberance" in their attempts to grasp what has happened to the local real estate market. My travels in the real estate market have taken me to some strange places in recent weeks leading me to conclude that our market has taken a full 180 degree turn from "Irrational Exuberance" to "Irrational Apathy." My many attempts to cajole listless and lethargic buyers off the fence have been met often with silence. Only the true risk takers- or let's call them the "savvy-" have been able to cash in on prices that defy common sense.

Dare to dream with me for just moment. The state of Florida has approximately 34 million acres in it, with just over half of that land being owned by the government. According to the US Census Bureau, in 2006 the Florida state population was 18,089,888 or less than one acre per person. Let's not forget that a lot the acres I am talking about are zoned for agricultural purposes such as raising cattle or growing oranges. Let's also remember that there are a lot of places in Florida that are far less appealing than Sarasota. With the population increasing by 13% from 2001 to 2006, one can see where this argument is heading. The demand for and scarcity of land in Florida is in direct tension with the current market conditions. In many ways pricing in the Sarasota market and the state market at large have surpassed the realm of the rational.

The herd mentality has long played a large role in the investment world and financial markets. In late 2005, if you had not yet flipped a piece of investment property you were feeling quite ignorant and most likely cashed in all your chips to buy something. If you did buy in late 2005 for investment purposes, you are either now feeding a never ending mortgage or you are in foreclosure. I picked up on this when a bartender was telling me about his 5 investment properties. Consider the alternative- everyone is running from the market right now. People are giving property to the banks and bringing millions to the closing table just to get rid of their "investments." Irrationality creeps into the scenario when properties are selling for far less than they could be replaced or reconstructed for.

Sellers and Banks are literally waving the white flag of surrender in an irrational manner just to get out of the market. Many properties are going at 50 cents on the dollar or to the highest bidder. One recent example I witnessed is the sale of an estate on South Siesta Key. The heirs, not wanting to wait for a better time decided that their late father's open bay front estate with sailboat water should be sold immediately for just over $1MM. The property was listed at $1.9MM and then reduced to $1.5MM to procure an immediate sale. Consider Gulf Gate- touted as one of the best locations in Sarasota. A very nice home just sold in Gulf Gate for $145,000 which is closer to land value than the price a single family home should command in that area.

Markets are driven by the people that comprise them. As they gain momentum the herd mentality that Nietzsche so well characterizes often takes over and creates time periods in which human behavior contradicts reason. Those who are independent thinkers will fare well in these dark days for Florida real estate- I recommend watching the market closely. As I see it, there has never been a better time to be different.

Notes From The Trenches- What's Really Going On

The most common question I am asked as a real estate practitioner is “What’s going on in the market?” In uncertain times like these many are wondering what exactly the real estate business looks like from a day to day point of view. Here are some snapshots from the last few weeks:

- I closed two deals in which the buyers came from Canada. The Canadians and Europeans are very active in our market and are driving many of the sales in my branch office of Michael Saunders and Company. Do not underestimate the impact of the foreigners who see this as an opportunity not to be passed up. In a recent conversation with a prominent Canadian I was told that he “could not afford not to” make his most recent purchase.

- I sold a listing in a multiple offer situation. I think that one of the biggest mistakes buyers are making right now is assuming that they are the only person looking at a particular property. The listing was simply a well-priced, well-kept home which was too good to pass up. I have been in multiple offer situations twice since the market changed.

- I am seeing activity related in large part to the passage of the controversial Amendment One which changes the taxation code in a way to positively impact the local real estate market. One of the buyers from the previous anecdote was spurred on to buy by the fact that his homestead exemption is now portable.

- Showings are up dramatically and open house traffic is significant. For all the negativity in the media, I think that the external indicators show that we are in for a brisk sales season.

A Postive Article in the Sarasota Herald Tribune?

Have housing prices hit bottom?
Florida's best known economist says market in region has stabilized
By MICHAEL POLLICK
michael.pollick@heraldtribune.com


Florida's best known economist says the Sarasota-Manatee residential property market bottomed out in September-October and has now stabilized in both price and volume.

Hank Fishkind predicts flat prices for both counties through 2010, as the region chews through excess inventories of new houses and condominiums.His findings jibe with what some Southwest Florida real estate observers have been saying and with what statistics from the Florida Association of Realtors have shown during the final months of 2007.

In November, for example, Sarasota-Bradenton Realtors sold twice as many homes as their Miami counterparts. The median price in November -- the most recent sales reports available -- was $267,700, down 4 percent from a year earlier, but an improvement from $244,300 in September and $263,900 in October.

Fishkind made his own predictions for this region as part of a 33-county economic report prepared on behalf of Attorney's Title Insurance Fund Inc., a leading title insurance underwriter.

His report painted Miami-Dade and Lee County as the state's most problematic areas, because of excessive condo building in South Florida and a proportionately higher level of home building during the boom in Fort Myers.

Orlando has the strongest market in Florida, followed by the Tampa Bay area and Interstate 4 corridor, Fishkind said."But both Manatee County and Sarasota County are still in considerably better shape than many other areas," he said.

Fishkind said that Charlotte County continues to shake off some of the vestiges of 2004's Hurricane Charley, but that the market is in far better shape than its neighbors to the south, where speculation on investment properties was rampant during the housing run-up.

"We are starting to see more normal activity," Fishkind said. "I am much more concerned about Lee County than I am about Punta Gorda."

Fishkind projects moderate rates of growth for population and employment in Manatee and Sarasota counties between now and 2010.

"In regard to housing growth and starts, speculative investing in the real estate market occurred in the area between 2003 and 2006 and resulted in an excessive amount of new homes in both markets," Fishkind said in his report. "

This is expected to temporarily slow down the area's housing markets in the next few years, and result in household growth exceeding housing starts in both counties in the next several years. A recovery in housing starts for both counties, however, is expected to begin in 2008," he wrote.

The Sarasota market appeared to bottom out in the spring at 470 to 480 closings per month. But then a national liquidity crisis sprang to life in August, prompted by defaults on subprime mortgages issued during the feverish markets of 2003-05 and continuing into 2006.

For a month or so, mortgage makers froze. As a result, sales fell to 310 in September and stayed flat at 319 in October.

"It seems to me that is the new bottom," Fishkind said, referring to sales in more recent months. "So I'm not seeing any major price declines, and I think volume has stabilized.

"Fishkind looked at average prices for all closed residential sales in both counties, taking into account for-sale-by-owner deals as well as builder sales.

In Sarasota, the average price for existing homes in Sarasota during 2007 was $330,042, a 12 percent drop from the peak of $374,107 in 2006, Fishkind reported.

In Manatee County, the decline in average prices has been more severe, coming down 24 percent to $280,622 in 2007 from a peak $370,200 in 2006.

The economist's forecast is predicated on the assumption that the national economy, while definitely in slow motion, will narrowly avert a full-blown recession.

"We have had a significant slowing to basically zero growth in the fourth quarter," he said. "The U.S. economy isn't going to start improving until the second half of '08 and into 2009.

"That national assumption is critically important because Florida depends on the Midwest and Northeast United States for a supply of residential real estate buyers, Fishkind acknowledged.

When they suffer, Southwest Florida suffers, too, on a lagging basis, he said.

"Almost everybody who moves to Florida in 2008 made a decision to move in 2007," Fishkind said. Because of that national slowdown, "we will see Florida's economy slowing in 2008 and not improving until 2009.

"Other economists have a more pessimistic view, leading to predictions for a more drawn-out recovery for Florida. But Fishkind maintains that the Sunshine State's historical drivers will lift it above other states in the Southeast.

"Florida tends to generate more jobs and population growth than any other state in the Southeastern United States, so turnaround for some parts of Florida ... will take place ahead of many other states in the Southeast," Fishkind said in a statement."Other parts of Florida, namely Miami-Dade County and Fort Myers, will not recover until later."