The number one complaint we hear from sellers is that they listed with a Realtor and never heard from them again.  The number one complaint we hear from buyers is that either the Realtor doesn’t return their calls or their Realtor is out of town and can’t show them properties.

Buyers and sellers aren’t being unrealistic.  They need help and that’s why they go to a real estate agent.  Because buyers and sellers have questions, it’s not enough for the agent to know the answers but keep the knowledge locked up in a vault.  That knowledge and information must be communicated with the customer.

Communication the Key to a Successful Real Estate Transaction

In the old days we provided each of our clients with a communication binder where they would store all the reports, ads, and feedback we’d send them through the mail or personal delivery. We would discuss the reports with the clients, but there was a delay because of they way they were sent.

Communication the Key to a Successful Real Estate Transaction

Today communication is better and immediate.  Our sellers receive a communication portal which is essentially a website we setup for each of our listings with private access by each seller.  They login and see the marketing activities, the showings, and the feedback.  They see the timelines and what is left to do on the checklist and what our team has already completed.  There are links to the PDF of their ad in the newspaper.  They can view each ad just as it’s printed. We can also post links to websites all over the Internet.  When we list a property we place it on dozens of websites.  The seller sees as we post these ads.  They can preview their ad on Zillow, Trulia, realtor.com, Craigslist, News Press, LeeCountyOnline.com, REMAX.com, and all the other websites we place it on.

Sellers love viewing their printed newspaper ad online.  They can send it to friends, or just have it for their records.  All communications between sellers are stored there as well for easy reference.

When the property goes pending, the transaction gets another website.  Inspection reports are posted along with progress on buyer’s loan if applicable, timelines, etc.  When we speak with clients they can actually see what we’re talking about.  It really helps make our sellers a more educated seller, and that’s a good thing.

We have systems for buyers as well.  While they’re shopping for a home we have a client portal.  In that portal they can store favorites, take notes, and be alerted when matching properties enter the market or change price immediately.  This helps buyers get a leg up on other buyers who are shopping for the same thing.  The early bird gets the worm.

When the buyer finds a property and goes under contract, we also setup a web portal where they can log in and check their progress.  We are in constant communication regarding their loan, inspections, insurance, HOA or Condo Association deadlines, etc.  We’ve taken a complicated process and made it easy to follow along and understand.

It all starts with communication.  When buyers and sellers understand the process and know ahead of time what to expect, they begin to trust.  They trust their agent and they trust the process.  When buyers and sellers trust the process, they’re not surprised and they can make adjustments when necessary without freaking out because they were caught off-guard.  Yes, unexpected surprises can happen in a real estate transaction, but being prepared and proper communication upfront goes a long way to solving surprises later on.

Many transactions have few if any surprises, and that’s the way it should be.  Each Realtor has their own systems they like to use.  When selecting a Realtor, just make sure you ask about communication so you know what to expect.  Have them show you their systems.  Selecting a Realtor based upon communication systems and skills might be the single best criteria you could use to determine which Realtor to work with.

You can always reach us at 239-489-4042 or search the MLS at www.LeeCountyOnline.com

Good luck and Happy Selling/Buying!

 

Closing coordinator Ellis Team is hiring

Our team is growing again.  We need a closing transaction coordinator.  Full-time position.  Call us at 239-489-4042 if you are looking for a job and have real estate, mortgage, HOA or title experience.

New Listings:

31 Lagoon St

31 Lagoon St North Fort Myers– 5 Bedroom 3 Bath home on the water seconds from the river with pool.

31 Lagoon St Single Property Website

Virtual Tour 31 Lagoon St

31 Lagoon St North Fort Myers on Instagram

12724 Aston Oaks Dr

5 Bedroom 3 Bath Home in South Fort Myers

12724  Aston Oaks Dr Single Property Website

12724 Aston Oaks Dr Virtual Tour

7479 Twin Eagle Ln

Eagle Ridge 5 Bedroom 4 Bath Golf Course Home

7479 Twin Eagle Ln Fort Myers  Single Property Website

 

 

Again, we are writing this article before official sales numbers are scheduled to be released later in the week.

Because of that we’ll focus on some new information that won’t be in the release this week. Official stats in January track December sales and year-end stats which are always interesting. This tells an important, but partial story, because it only tells what has happened. Today we’ll focus on what is happening right now.

Fort Myers, Cape Coral, Lehigh Acres Listing Inventory
Fort Myers, Cape Coral, Lehigh Acres Listing Inventory

Listing inventory had risen slightly for the past 4 months, but it has dropped slightly in January. Pending sales had also been dropping slightly which is probably why inventory was rising. However, pending sales have increased this January which may help account for why inventory recently dropped.

While inventory has dropped everywhere, perhaps the most significant drop has been in Lehigh acres. Lehigh Acres has experienced a 61% drop in inventory since January 2010. Cape Coral has seen a 38.54% drop in inventory in the same period, and Fort Myers has seen a 32.52% drop. Lee County has seen a 35.42% overall drop in single family inventory, so Lehigh Acres 61% drop leads the way by a large margin.

Lehigh Acres was home to single family home sales in the $25,000-$40,000 range a few years ago and now it’s getting tough to find homes much below $70,000. Investors have swooped in and gobbled up everything they can. Homes at the lower prices were cash flowing as investors could purchase, fix them up a little bit and rent them for more return on their money than they could get at bank or other places.

Foreclosure Vs Short Sales SW Florida January 2012
SW Florida Foreclosures Vs Short Sales January 2012

Another trend we have noticed is short sale closing increased as banks have geared up to handle more short sales just as foreclosure sales decreased. We’ve included a graph that illustrates foreclosure versus short sale closings over time. Keep in mind that banks have had fewer foreclosures due to the robo signing issue and that has affected foreclosure inventory throughout 2011. We’ve been told to expect more foreclosures in 2012, however they will not process them as fast as they did back in 2009 which caused the whole robo signing legal fiasco in the first place.

Next week we’ll go inside the official numbers and give additional background as to what drove the numbers and how 2011 ended compared to previous years. Going forward we are seeing a robust selling season as many have realized our median prices have been on the rise and the bargains may be running out. If rising pending sales, rising median sale prices and decreased inventory are any indication heading into season, the next few months could be interesting to watch.

Setting realistic expectations is key for buyers and sellers in this market. Realistically, prices have room to rise especially as the economy improves. Nobody is predicting a return to 2005 prices anytime soon, so if you read prices are rising and you’re waiting 6 months to put your home on the market so you can get what you paid back in 2005, you might want to reset your expectations.

We are back to healthy growth, and if we somehow miraculously escalated back to 2005 prices, it would be as unhealthy now as it was back then. Slow and steady might just be what the doctor ordered, and who knows, that might just be what we’ll get.

 

 

Because we are writing this article this week before official numbers are released, we decided to go inside the numbers and focus on listing inventory and sales data.  According to preliminary numbers researched by the Ellis Team, listing inventory rose again for the 3rd consecutive month.

Single Family Home Listing Inventory in SW Florida
SW Florida December 2011 Listing Inventory

Lehigh Acres has been holding fairly steady while Cape Coral is seeing the largest gains in inventory.  Fort Myers is inching higher ever so slightly.

What’s interesting is the distressed sales market.  We track a variety of graphs.  One graph not shown here because it’s a little tangled and hard to read in newspaper format shows large drops in distressed sales in Lehigh Acres, Fort Myers, and Lee County overall.  Cape Coral has held steady at 50.45% of all single family sales being distressed.  Lee County stands at 48% distressed rate in November.

SW Florida Distressed Sales Chart December 2011
Foreclosures Vs Short Sales December 2011

We have included a Foreclosures Vs Short Sales graph that is a bit easier to read.  It fairly well shows the history of the foreclosure and short sale market in SW Florida.  As you can see, the height of foreclosure sales was in June 2009, while the height of the short sale market was March 2011.

 

Banks revved up their short sale departments to handle an increased load.  It can be said that potentially each of these successful short sales may have saved a corresponding amount of foreclosures, so it was in the banks and the markets best interests to sell these homes as short sales rather than as foreclosures.

Going into 2012 we’re going to continue to watch the listing inventory and the mix of inventory.  Traditional sales are on the rise as a percentage of all sales, although many homeowners are not selling at today’s bargain basement prices.

Speaking of bargain prices, many buyers are calling wanting to buy homes for investment and expecting 2009 prices.  It seems like sellers are always the last to recognize when prices are dropping and buyers are the last to recognize when prices are rising.  Why is that?  Could it be selective hearing or denial?

We can definitively say that investment homes in Cape Coral and Lehigh acres bottomed in 2009 and have risen since.  Buyers today can no longer pick up a home for $35,000 in Lehigh unless it has major problems.  $70,000 is more common place for the low end now, so essentially prices in the low end have doubled.

Sales are flat in December versus November; however we are expecting sales to pickup in season again.  We’ve had no trouble selling homes.  The biggest challenges we’ve faced are closing these homes.  Lately we’ve been encountering title issues, mortgage re-disclosure issues due to any delays, and buyers not waiting patiently for the short sale approval.  We’re getting short sales approved within 60 days in many cases, but buyers are impatient.  Going forward the industry will have to do a better job educating buyers as to what the realistic expectations are for approval and closing time frames on short sales.

We’ll also watch foreclosure inventory as we are expecting a few more in the 1st and 2nd quarters of 2012.

We’ll keep our eye on the SW Florida real estate market for you, and whether you’re a buyer or seller, we hope Santa is better to you this year than he was last year.  The market is looking up, and we hope your holiday spirits are too.

 

Don’t let the headline fool you, we’re a big fan of appraisals.  The key word is accurate, competent appraisals.  So many times sellers want us to overprice a home and sell it to a northern or foreign buyer assuming they don’t really know our market.  What sellers fail to realize is buyers usually look at several developments, several homes, and study the market more than sellers do.  If you overprice a home, it will sit.  This is a price sensitive market, and when you price a home at or very near its value, activity heats up and properties move.  We often tell sellers even if we were to dupe an unsuspecting buyer into overpaying for a home; the bank is still going to order an appraisal before they lend money.  Not only do buyers tend to research the market but they have a backup with bank appraisal.  Some sellers say, “Well, let’s find a foreign cash buyer.”  Sellers don’t realize cash buyers research the market perhaps more vigorously than financed buyers do, so they’re really grasping at straws trying to sell an overpriced property into a price sensitive market.

Value is in the Eye of the Beholder
Your Home as Seen By Buyer, Seller, Tax Assessor, Appraiser

Just as some sellers need to research the market better, so do some appraisers.  In the past week I’ve heard several complaints from Realtors who’ve said a bad appraisal nixed their closing.  Sometimes banks use appraisal management companies who utilize appraisers from different markets who aren’t as familiar with the local market as local appraisers. We’ve had past clients ask us to market homes in other cities as far away as Pensacola Fl and we declined simply because we’re not experts in that market.  Out of town appraisers are at a big disadvantage and couldn’t possibly know everything they should about our market.

For instance, some waterfront canal property in Cape Coral brings more value than others.  Nearby neighborhoods in SW Florida may not be good comparables even though they are located right next to each other.  Computer models and unsuspecting appraisers wouldn’t always know this.

Many times when the bank is considering a short sale or pricing a foreclosure, they utilize a BPO (Broker Price Opinion) and/or an appraisal.  If either comes back too high, the short sale is rejected or the foreclosure is priced too high.  Recently we had an asset manager contact us because our BPO came in at one figure and the bank’s appraiser came in much higher.  After studying comparable sales used by the appraiser we discovered he used gulf access homes as comps even though the subject property was not waterfront.  He also used a deed in lieu of foreclosure sale which wasn’t really a sale at all; it was simply a homeowner giving the property back to the bank for the loan amount.  We submitted documentation to have the appraisal overturned so the bank can sell the home.

Bad appraisals can cost a sale at both ends.  If the short sale appraisal is too high, the price the seller’s bank accepts may be higher than the buyer’s bank who is lending money appraisal reveals, so the deal dies unless adjustments are made, which isn’t always easy or possible with new rules placed by the government.  These new regulations, designed to protect lending and real estate values are doing the opposite.  Rarely when government gets involved does anything improve, it just takes more time, more aggravation, and blown deals, which doesn’t stabilize the market.

If the lending appraiser comes in too low, the buyer’s lender won’t loan the money at the contract price, potentially scuttling an otherwise good transaction that should have closed.  There are lots of good appraisals out there which do blow some deals, which furthers our comment to sellers that it’s not wise to purposely overprice a property.  Keep in mind, value is in the eyes of the market, not any one buyer nor any one seller.  Values are subjective, and some properties are difficult to evaluate.  Not all sales are cookie cutter sales with multiple active and sold comparables.

It pays to study the market, and if you doubt the value, ask questions.  Sellers sometimes produce appraisals that are too high and the market won’t accept, and bank ordered appraisals are sometimes too low and not at actual market value.  Do your homework and question their work.  Request a copy of the appraisal.  You paid for it.  Some banks will let you see it.  And remember, keep an objective mind.  Everyone in the transaction has their own idea of what the value is, or should be.  Make sure that idea is supported by facts, data and logic and not ignorance of the market or motivations.

Banks are contacting customers who are past due or in financial trouble and offering owners or tenants up to $20,000 in relocation assistance to move out of home and hire an experienced agent to sell the home as a short sale.  Banks are also offering owners money to agree to a deed in lieu foreclosure in some instances as well.

Benefits of Short Sale Versus Foreclosure Chart
Alternatives to Foreclosure Chart

There are several advantages for taking the bank up on their offer.  If you let the property go to foreclosure, you’ll be evicted without relocation assistance.  Additionally your credit will suffer more in a foreclosure than a short sale or deed in lieu.  The owner is more in control when actively pursuing a sale through an experienced agent than giving up all control to the bank and the legal system.

A short sale is a commonly used alternative to foreclosure. Generally, when putting your home on the market, the goal is to market and sell your house for an amount greater than any and all outstanding liens against the property. Liens include all mortgages, escrows and fees on the property.

If you can no longer afford to make your mortgage payments and your house is worth less than you owe, a short sale allows you to sell your house at the current fair market value. You then have an option to move to a more affordable situation. In a short sale, the investor or owner of your loan must approve the sale because they are entitled to repayment of the loan and will be receiving less than the amount owed.

If you have additional liens on your property with other lenders, such as a home equity loan, all investors must come to an agreement in order to complete the short sale. This process takes time, and an experienced agent is required to navigate and negotiate through these challenges.

Another alternative is a deed in lieu of foreclosure. With a deed in lieu, you voluntarily transfer ownership of the property to your investor to satisfy the amount due on your first mortgage. In some cases, you may be eligible for a deed in lieu without first attempting a short sale of your home. A deed in lieu generally takes about 90 days, depending on your situation.

In either a short sale or deed in lieu you may be responsible for paying a deficiency.  There are many factors that determine this, such as if the home was your primary residence, what state you live in, your financial situation, etc.  Sometimes this can be negotiated with your lender.

In any event, most lenders agree it is much better on your credit report and they are likely to lend you money in the future faster if you agree to a short sale or deed in lieu instead of a full blown foreclosure.

If you’ve been contacted by your lender, it may be at least worth considering your options.  Don’t throw away documents sent to you by your lender.  If they make you an offer call your attorney for legal advice or an experienced real estate agent for advice on the program and assistance selling your home.

The banks really don’t want your home back.  They’d prefer that owners pay their mortgage payments.  When that’s not possible, it may be less expensive to offer the occupant relocation assistance and get on with the process of selling the home before it gets to the costly foreclosure process.  Once the home gets into foreclosure, the costs mount, the credit suffers, and owners lose options.

If we can help, call us at 239-489-4042.  Each situation is unique and it takes time to look into each program.  The good news is we have past experience with many of these programs.

 

We’re writing this article this week two days before official numbers are released, so by the time you read this official numbers will have been released. Absent this knowledge, we expect prices in August to be higher than last year and sales to be down from last year, however sales volume may be higher than July.

SW Florida Real Estate Bargains
Year End Median Sale Prices For Single Family Homes SW Florida

We’ve included a chart of average year end sales prices which is really an average of prices for that given year, not the Dec 31 average price. As you can see, prices fell from their peak in 2005 through 2009 where they stabilized and actually rose in 2010. In 2011 we’ve seen more gains over 2010.

We started writing articles and advertising back in 2009 that Florida was on sale and buyers flocked here in droves looking for bargains from all over the world. Buyers have been competing with each other for the best bargains and in fact many of these properties have seen multiple offers. As you can see from the year end chart, prices are still very affordable and are on par with 1996-1997 prices. If you look at the attached chart you’ll notice prices in July were up 14.33% over last year and up 19.1% over 2009 prices.

Median Sale Prices Single Family Homes in SW Florida
SW Florida Real Estate Prices 2009-2011

We are fielding calls from buyers looking for foreclosures, short sales, and otherwise good bargains. They just finished reading on a website or watching an older YouTube video how another buyer bought a $20,000 condo or $30,000 house close to the beach and they want to come here and buy the same thing.

If you ask any agent in this market I’m sure they’d chuckle because they’re answering some of the very same calls. This is where the perception that Florida is on sale, which it is, collides with reality. The days of buying newer homes for $35,000 are over unless the home has serious defective drywall issues or is gutted. We still have some inexpensive condos for sale. For instance we just listed a bank foreclosure 1 bedroom, 1 bath condo in Mystic Gardens for $27,900 which is a bargain. These deals are becoming fewer and farther between.

Unfortunately buyers from all over are calling and expecting homes close to the beach or on the beach for ridiculously low prices. While it is true back in 2009 we had some seriously under-priced homes from some of the banks, prices have gone up considerably since then. We’re still well below replacement cost in most cases and we’re not headed back to 2005 prices anytime soon, however we are still a bargain.

Florida Real Estate Bargains

I guess there is a difference between a bargain and a steal. The steals are over, but there are fantastic bargains and opportunities in this market if you’re realistic. If a buyer is unrealistic, they’ll suffer the same fate as an unrealistic seller, which is no transaction. A buyer who fails to buy in this market is just as damaged as a seller who overprices and misses the top. While the bottom may be behind us, we’re still close enough to it that we can see it in our rear view mirror and prices today will look like a bargain years from now.

Remember back in time when someone you know once said “Gosh, I should have bought every piece of property I could get my hands on back when prices were lower?” Well, in the future I’m sure there will be those that say, “Gosh, I should have bought everything I could back in 2010 and 2011. Those were the days when there was little competition from new home builders, interest rates were at their lowest, prices were below replacement cost, and at those prices they actually cash flowed.”

It pays to be an educated consumer, whether you’re on the buying or selling end. Remember, money is always made on the “Buy”, not the sell. Inventory is going down. If you’re truly a buyer, learn the market and step up now. I bet you’ll be glad you did.

It’s kind of funny how humans follow the herd mentality. When everyone else is buying, people feel more comfortable buying at the top, but when things are down, people are scared of overpaying. Back in 2005 you were overpaying, but most felt good about their purchases. Look what prices have done since. The smart money is buying and holding today. Failure to land a property now is a wasted opportunity.

We’ve been saying for months the next round of foreclosures to hit the market may be higher priced than recent rounds.  Testament to that fact one just arrived today for over $1 Million.  We are expecting another $1 Million+ property within a few weeks on Captiva Island as well.  To date banks have cleared out many of the vacant investment properties that were built as part of the boom back in 2004-2006.

Front of Bayfront Home
Bay front Home Bonita Springs Florida

The higher priced properties tended to cater to wealthier borrowers who perhaps lived in the home, at least part time, and could afford to ride out the bad economy longer than investors who ran for the hills when values turned upside down and were over extended.  While higher priced borrowers too may well have been over-extended, many had the wherewithal to ride it out, but their days have also been numbered.

Bay View Bonita Springs Home
Bay View Home

Case in point is our newest listing, which is a spectacular bay front home in Bonita Springs.  It is a 2 story home and features an elevator, a large black pool, a Viking grill on lanai for superb outdoor entertaining, and a gourmet kitchen with all the extras.

Outdoor Lanai and Pool
Outdoor Lanai and Pool
Gourmet Kitchen
Gourmet Kitchen

Every bedroom features a bay view.  The property has 2 docks both with boat lifts, a 3 car garage, and wide open views from the family room.  The property is located at the end of the street on a cul-de-sac so the home is essentially at the end of a peninsula.  The property is very private and is an entertainers as well as a boaters dream home.

Entertaining Area Upstairs

The home was purchased for $2.25 Million in 2007 and is now on the market at $1.51 Million.  The home has 3 bedrooms and a den along with 3 full baths plus 3 half baths. The home has 5,124 Sq Ft of living area.  Click to view the home online or take a Virtual Tour.

We’ve seen a concerted effort by banks to avoid foreclosing on these expensive properties.  A few large banks have contacted us with lists of and asked us tow work with selected borrowers to sell their home short now versus foreclosing later.

Imagine that fact.  A few short years ago banks were reluctant to process and approve short sales, and now they’re coming to experienced Realtors and asking for assistance with their customers to effectuate a short sale.  Even though the banks have identified their own customers they’d like to do workout a short sale with, they recognize the short sale is a complicated process and they want experienced agents to counsel their borrowers and market the short sale to buyers.

You might ask why a bank would do this.  The answer is it’s less expensive to consummate a short sale than go through the foreclosure process paying whopping legal bills all the while the property is not being maintained.  This process leads to a deteriorating property and a lower sale later on.  Banks are simply attempting to minimize losses.

In these cases it may make sense for a buyer to consider a short sale, or one of these high end foreclosures.  If you’re finding today’s economic environment challenging, call an experienced Realtor today and learn about options you might not have even known existed.  We just might be able to help you in these tough times and help you move forward instead of looking back.

 

With foreclosures slowing down, the competition to purchase these bargains has become even stiffer.  Many people call each week hoping to land these bargain properties and few will win the prize, so we thought it might be helpful to buyers and agents alike to learn the inside secrets on being the successful bidder on these properties.

As a listing agent for many banks, we know what the banks are looking for. We speak to the asset managers.  If you follow these tips your chances will increase as not every buyer knows what the bank considers when looking at multiple offers, which many foreclosures receive.

The first thing buyers must understand is there is a lot of competition for these homes.  Typically bank foreclosures go fast, and for over asking price.  Everybody seems to want them.  So structuring your offer and submitting it correctly will increase your chances.

Foreclosure Tips From a Real Estate Pro
How To Buy a Foreclosure Chart

Keep in mind, listing agents must have all the required information, so if they ask for something upfront, they mean it.  Listing agents don’t have time to track your agent down for this info.  We attach a document to each MLS listing specifying what is required with the offer.  Make sure your agent completes every single field.  We submit offers into an online system, and if information is missing, the offer cannot be submitted.

The bank never sees your offer until one is accepted.  The listing agent must enter information into an online submission, and it must conform to what the bank asks for, and all fields must be filled out.  If a foreclosure has 20 offers, the listing agent doesn’t have time to call 15 agents and beg for information that is required by the banks online system.  Keep in mind, it takes awhile to upload 20 offers, and the listing agent may be dealing with 20 properties.

Listing bank foreclosures is very time intensive, and the listing agent coordinates everything from repairs to working out HOA fees, title issues, code violations, etc.  Providing the required information is the first step.

Secondly, consider that you’re probably competing against other buyers, and that many will be above asking price.  So how do you compete?  Consider a higher escrow money deposit, shorter closing time, and definitely a shorter inspection period.  Bank asset managers are also gauging the strength of each buyer, so you want to put your best foot forward in hopes of getting the property.

Banks are on the lookout for buyers tying up properties then using contingencies to escape later.  Banks want solid deals, so you want to dress up your offer to make you look like the best buyer in the batch.  The price will be close to asking price or above because it’s a deal anyway, so you have to compete in other ways.

In many cases banks will counter multiple offers with highest and best.  Buyers are shocked when the bank doesn’t and just accepts one offer, so it always pays to pony up early on and go for it.  If you do get a highest and best form, assume the other buyer wants it as bad as you do, and act accordingly, because if you don’t, chances are you won’t end up with the home.

Be careful that your offer is written well and clearly states all fees and costs.  It is difficult to impossible to make changes later, and it could cost you the home.  Any change to the contract later on opens up the possibility the home goes back out for rebid and you could lose it, so it pays to write offer correctly the first time.  Same applies with names; make sure everyone who wishes to take title is on contract from beginning. You may not be able to add names until after closing, which could require new title insurance and additional fees.

If you’re purchasing as an LLC, make sure you provide documents upfront that you’re authorized to sign for the LLC.  The bank will ask.

These are some very useful tips by an experienced foreclosure agent. Each bank has their own rules, so be sure to follow directions well.  Make sure you’re working with an agent who understands contract language. Many times we see financing contracts that don’t match up or specify some costs buyer is not allowed to pay under the buyer’s financing program, and the offer cannot be presented to bank until language is cleaned up which could cost the buyer the sale because of delays.  Be sure to work with an agent who has experience writing clear and concise contracts and understands financing in and out.

Following these tips will increase your chances, and ignoring them will most assuredly have you scratching your head wondering why the bank selected another offer.  Good luck and happy house hunting.

 

As you can see from the attached chart, the percentages of sales that are distressed are rising once again.  This isn’t necessarily a bad thing as we believe banks should actively work with sellers to allow short sales rather than going through an arduous and costly foreclosure process that ties the home up for months or years.  If the homeowner simply cannot afford to stay in the home and all other realistic options have been exhausted, banks should assist in allowing current homeowner to sell to someone who can afford and wants to be in the home, and everyone wins including the neighborhood.

Distressed Sales Chart for Greater Fort Myers, Cape Coral Florida
SW Florida Distressed Sales

Official sales numbers will be released after we write this article.  Our internal market research suggests sales will fall in July compared to June by about 216 +/- homes and median prices will fall slightly as well.  This may be a function that foreclosures made up a larger portion of the distressed sale pie than in previous months, signaling short sale percentages declined versus foreclosures.

Banks are beginning to release more foreclosures as they’ve turned a corner in the legal battle when they went back and cleaned up the process to file foreclosures.  We all knew there would be some pent-up foreclosure supply, but nothing along the lines of 2008-2009 foreclosure filings.

Cape Coral saw almost a 5% increase in distressed sale percentages while Lehigh Acres was up about 3%.  Overall sales were down in Lee County, but the breakdown of the sales was leaning more towards distressed sales.  County wide distressed sales equaled 48.82% of all single family home sales in July, up from 44.57% in June.

Contrast this with listing inventory in Lee County and you would think there would be upward price pressure as inventory levels dwindle.  It’s fascinating to watch the economic dynamics in play.  A similar analogy might be predicting hurricane’s forecast trajectory plot and intensity.  A storm can be influenced by dry air, low pressure, ridges anticipating forming at a certain time and point, and so forth.

Single Family Listing Inventory Fort Myers- Cape Coral
SW Florida Listing Inventory

Forecasting the SW Florida housing market has similar variables influencing the market.  We have banks processing foreclosures as fast as they can, banks willingness to accept short sales, traditional sellers moving up, down, or not at all depending on how much they owe and their job security, and the overall job market.  Are jobs moving into the area or out of?  When will the economy improve?  Interest rates and insurance costs also influence affordability and motivation for buyers.

Predicting the housing market would be so much easier if you could accurately predict each individual variable.  Since we cannot, all we can do is monitor local and sometimes world events and report on how they are affecting the real estate market.  In past articles we’ve talked about the effect of United States debt on interest rates.  We’ve talked about the price of oil’s effect on the economy, and housing supply issues.

As we enter an election year, hopefully the focus will be on the economy and jobs, and if Washington gets out of the private sector’s way and allows it to grow, maybe, just maybe, we’ll see a positive influence on several variables that influence our local real estate market.

 

The past few weeks we’ve laid out in detail how prices have increased and some reasons that would explain why. This week we thought we’d illustrate how the distressed market is faring versus the traditional or normal resale’s and look at how that impacts prices.

Breakdown of Distressed Sales Versus Normal Sales SW Florida
SW FLorida Distressed Sales Breakdown

As you can see from the chart, distressed sales are down about 4% in 2011 versus 2010. We all know distressed sales have weighed down the SW Florida real estate market for several years. Prices didn’t just fall in half, they fell in some cases to about 25% of what they were back in 2005 or early 2006.

We’ve often said sale prices have fallen artificially too low and the only thing holding them that low was a flood of continuing foreclosures entering the market to keep the prices down. For the most part, investors and 1st time buyers bought every foreclosure they could and prices stayed low because there were new foreclosures coming on to satisfy buyers appetite.

The foreclosure machine hit a snag in late 2010 due to legal concerns in Florida and 10 other states; however we expect that foreclosures will return in the 2nd qtr of 2011. The question is how many more are left, and how long will it take the banks to work through them. I guess the other question is how long will the economy be stagnant further forcing teetering homeowners over the brink?

Assuming we’re in the 7th inning of the foreclosure crisis and that any wave of future foreclosures won’t be as robust as past waves, prices should continue to rise. Official numbers for March won’t be released for about 3 weeks, but preliminarily we’re seeing median prices rising about 3.45% over last year and mean average prices rising about 16%. Stats were pulled as of March 29, and it does take several days for all sales to be entered into MLS, so these are very raw and preliminary numbers, but they do coincide with what we’ve been seeing and predicting the last several months.

As prices rise, more and more sellers will qualify to sell without being a short sale or foreclosure, which will also change the charts. Nobody should expect an overnight turn around as our market is still healing, and even though we’re in the latter stages of the correction, healing can be painful. Sellers expecting a return to 2005 prices might be waiting years or a decade or more.

We’ll also be anticipating Congress submitting and passing a budget. Many do not realize that last year’s Congress didn’t do that, so we haven’t had a budget in 2 years. They’ve kicked the can down the road and left it for others to do. Because Congress didn’t do their job last year, it’s making it tougher this year, and everyone knows we need steep budget cuts. Inflation will rise as we cannot continue deficit spending. This throws the capital markets off and interest rates could rise, which could also affect real estate prices as increased rates dig into buying power for buyers. When rates go higher, buyers have to offer less for homes in many cases to afford the property. Increased interest rates are like a hidden tax on real estate, so we’d hope for our country to get it’s spending in order for a lot of reasons.

Stay tuned and we’ll watch together how these forces play out and affect our market. Nothing is as simple as one variable dictating prices. We have several variables at work, and time will tell.

Watch our April 2011 SW Florida Real Estate Market Update