People are celebrating the Holidays in a new special way this year, and some of it is quite interesting.  I’ve received e-mails from various sources, and regardless of what your religion is, anything that is beautiful and makes people think what the Holidays are really about is worth sharing.

Here are a few links, and feel free to share others as well.

A Social Network Christmas

A New Way to Remember The Spirit of Christmas
A Social Network Christmas

The Digital Story of the Nativity – The Birth of Jesus

Digital Story of the Nativity of Jesus

No, we’re not talking about Santa’s bag here.  We thought this week we’d do a mailbag of topics, and invite questions for future articles.  If you have a question or topic you’d like covered, simply e-mail me at Brett@Topagent.com and we’ll do our best.

Interest Rates

Yes, they’ve been on the move, and the move has been upward.  Rates have risen about .625% in the past 1-2 weeks.  For every 1% rise in rates, it takes away about 9% of a purchasers buying power, so buyers have just lost about 5% buying power in the past 2 weeks.  This is why the media and Wall St. talk about rates so much and where they are today versus historically.  Now, they are still historically low, but they have been moving up.  With prices this low, and rates still fairly low, buying power is still great even though it may not be what it was 2 weeks ago.

SW Florida Real Estate Market Update
It's in the Bag

Foreclosure Listings

Foreclosure listings for single family homes active on the market in Lee County stood at 768 in November Versus 1,107 today.  That’s a 32.42% increase in just one month, and we can attribute this to banks placing properties on the market after the foreclosure moratorium because of the robo-signing issues.  Most banks feel confident going forward, especially for their non-occupied properties.  We see this as a good sign.  The quicker we get all inventory out and to the market the faster the market can heal and move forward.

Pending Sales

Pending sales rose again in November which indicates buyers are ready, willing, and able to buy and they’re making every attempt.  This is another reason we’d like to see all available inventory on the market as the buyers are definitely biting.  All areas of Lee County are seeing a rise in pending sales.  Cape Coral saw a rise of 60 pending sales over last month, Fort Myers saw a rise of 69 sales and Lehigh Acres experienced a rise of 32 pending sales.  Season is upon us and we’ve notice an uptick in buying activity from buyers up North sooner than we did last year, which could mean we’ll be in for another good season this year.

Current Market Index

Each month the Ellis Team produces a current market index which accurately predicts forward activity in the SW Florida real estate market.  This month the index dropped to 4.22, down from 4.62 last month.  The lower the number the hotter the real estate market is.  A higher number indicates a buyers market. We wouldn’t say it’s a buyers market.  We’d characterize it as a sellers market if the property is priced correctly.  Buyers are competing against each other with multiple offers on properties that are priced correctly, and bypassing over-priced listings.  The market speaks.  Sometimes it’s as easy as slowing down and listening to what it’s saying, and if a property isn’t receiving offers, then there’s a good chance it’s the price.  The market is hot, but it’s not forgiving.

Closed Sales Flat

November closed sales were relatively flat Versus October.  In fact, our research shows they’re down slightly, but official numbers won’t be released until next week.  Last November sales rose, so when official numbers come out we could see a transaction drop from last year.

This is the last article before Christmas believe it or not, so next week we’ll either answer your questions or provide updated analysis once official numbers are released.  We hope Santa is good to you and brings you good tides and good cheer, and no matter how big the bag is this year, always look for opportunities to lift somebody else’s spirits this Holiday season and into the new year.

Last week we gave tips on how to sell a home in today’s market from the non-distressed home seller’s perspective.  This week we thought we’d revisit tips on how to buy a foreclosure property since so many try, but very few are the winning buyer.  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.

Tips on buying bank foreclosures in Cape Coral, Fort Myers, Lehigh Acres, and all of SW Florida
Tips on Buying Bank Foreclosures in SW Florida

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 and 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 they required upfront.  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 contract later on opens up 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.

Search SW Florida bank foreclosures single family homes

Search SW Florida bank foreclosures condominiums

I’ve received this e-mail a few times and forwarded it on, but today I thought it was good enough to post.  Author unknown.

______________________________________________________________________

Two Choices
What would you do?….you make the choice. Don’t look for a punch line, there isn’t one. Read it anyway. My question is: Would you have made the same choice?

At a fundraising dinner for a school that serves children with learning disabilities, the father of one of the students delivered a speech that would never be forgotten by all who attended. After extolling the school and its
Dedicated staff, he offered a question:

‘When not interfered with by outside influences, everything nature does, is done with perfection.
Yet my son, Shay, cannot learn things as other children do. He cannot understand things as other children do.
Where is the natural order of things in my son?’

The audience was stilled by the query.

The father continued. ‘I believe that when a child like Shay, who was mentally and physically disabled comes into the world, an opportunity to realize true human nature presents itself, and it comes in the way other people treat that child.’

Then he told the following story:

Shay and I had walked past a park where some boys Shay knew were playing baseball. Shay asked, ‘Do you think they’ll let me play?’ I knew that most of the boys would not want someone like Shay on their team, but as a father I also understood that if my son were allowed to play, it would give him a much-needed sense of belonging and some confidence to be accepted by others in spite of his handicaps.

I approached one of the boys on the field and asked (not expecting much) if Shay could play. The boy looked around for guidance and said, ‘We’re losing by six runs and the game is in the eighth inning. I guess he can be on our team and we’ll try to put him in to bat in the ninth inning..’

One Young Boy Decides Shay Should Play on Their Team


Shay struggled over to the team’s bench and, with a broad smile, put on a team shirt.. I watched with a small tear in my eye and warmth in my heart. The boys saw my joy at my son being accepted.

In the bottom of the eighth inning, Shay’s team scored a few runs but was still behind by three.

In the top of the ninth inning, Shay put on a glove and played in the right field. Even though no hits came his way, he was obviously ecstatic just to be in the game and on the field, grinning from ear to ear as I waved to him from the stands.

In the bottom of the ninth inning, Shay’s team scored again.
Now, with two outs and the bases loaded, the potential winning run was on base and Shay was scheduled to be next at bat.
At this juncture, do they let Shay bat and give away their chance to win the game?

Surprisingly, Shay was given the bat. Everyone knew that a hit was all but impossible because Shay didn’t even know how to hold the bat properly, much less connect with the ball

However, as Shay stepped up to the
Plate, the pitcher, recognizing that the other team was putting winning aside for this moment in Shay’s life, moved in a few steps to lob the ball in softly so Shay could at least make contact.
The first pitch came and Shay swung clumsily and missed.
The pitcher again took a few steps forward to toss the ball softly towards Shay.
As the pitch came in, Shay swung at the ball and hit a slow ground ball right back to the pitcher.
The game would now be over.
The pitcher picked up the soft grounder and could have easily thrown the ball to the first baseman.
Shay would have been out and that would have been the end of the game.
Instead, the pitcher threw the ball right over the first baseman’s head, out of reach of all team mates.
Everyone from the stands and both teams started yelling, ‘Shay, run to first!
Run to first!’
Never in his life had Shay ever run that far, but he made it to first base.
He scampered down the baseline, wide-eyed and startled.
Everyone yelled, ‘Run to second, run to second!’
Catching his breath, Shay awkwardly ran towards second, gleaming and struggling to make it to the base.
By the time Shay rounded towards second base, the right fielder had the ball . The smallest guy on their team who now had his first chance to be the hero for his team.

He could have thrown the ball to the second-baseman for the tag, but he understood the pitcher’s intentions so he, too, intentionally threw the ball high and far over the third-baseman’s head.
Shay ran toward third base deliriously as the runners ahead of him circled the bases toward home.

All were screaming, ‘Shay, Shay, Shay, all the Way Shay’

Shay reached third base because the opposing shortstop ran to help him by turning him in the direction of third base, and shouted, ‘Run to third!

Shay, run to third!’

Our Attempt to Illustrate That Moment
Our Attempt to Illustrate That Moment


As Shay rounded third, the boys from both teams, and the spectators, were on their feet screaming, ‘Shay, run home! Run home!’

Shay ran to home, stepped on the plate, and was cheered as the hero who hit the grand slam and won the game for his team

‘That day’, said the father softly with tears now rolling down his face, ‘the boys from both teams helped bring a piece of true love and humanity into this world’.

AND NOW A LITTLE FOOT NOTE TO THIS STORY:
We all send thousands of jokes through the e-mail without a second thought, but when it comes to sending messages about life choices, people hesitate.

The crude, vulgar, and often obscene pass freely through cyberspace, but public discussion about decency is too often suppressed in our schools and workplaces.

If you’re thinking about forwarding this message, chances are that you’re probably sorting out the people in your address book who aren’t the ‘appropriate’ ones to receive this type of message Well, the person who sent you this believes that we all can make a difference.
We all have thousands of opportunities every single day to help realize the ‘natural order of things.’

So many seemingly trivial interactions between two people present us with a choice:

Do we pass along a little spark of love and humanity or do we pass up those opportunities and leave the world a little bit colder in the process?

A wise man once said every society is judged by how it treats it’s least fortunate amongst them.

You now have two choices:

1. Delete

2. Forward
May your day, be a Shay Day.
MAY GOD BLESS EVERYONE WHO DECIDES TO PASS THIS ON IN MEMORY OF SHAY…………..

Shay didn’t make it to another summer. He died that winter, having never forgotten being the hero and making me so happy, and coming home and seeing his Mother tearfully embrace her little hero of the day!

In past articles we’ve given tips on what to be aware of when buying a short sale or foreclosure as these sales are relatively new to SW Florida in the past few years. We’ve also given tips on how to select an agent to properly handle a complex short sale when selling, but we haven’t yet offered tips on how to sell a normal non-distressed property in today’s distressed environment.

Tips on How to Sell a Property in Today’s Market

Tips on How to Sell a Property in Today’s Market
Selling Your Home is a Balancing Act

Selling a “Normal” sale can be much different than selling a distressed property.  A normal seller has some distinct advantages over distressed sellers, and a few disadvantages as well.

A short seller may have limited time to sell if they haven’t been making mortgage or HOA payments.  Either the bank or HOA can foreclose, so time is not always on the seller’s side.  A short seller needs to price the home competitively, but not too high or too low.  If they price too low the bank will reject the short sale and if they price too high buyers won’t be interested.

Correct Pricing

A normal seller should also price correctly.  If the property is priced too high, buyers will either not buy, or will buy something that offers better value.  If the home is priced too low, the seller is just giving equity away to the new buyer.

A normal seller typically doesn’t “Have To” sell because of a bank foreclosure.  They may want to sell to trade up, trade down, take a job relocation, move closer to schools, family, etc.  The “Wish To” sell is very different than the “Have To” sell.  Buyers are often more interested in a “Normal” sale because there is just one decision maker.  The buyer doesn’t have to wait weeks or months for a decision and there is less stress on the “Normal” seller about deficiency judgments and tax implications, all making for a smoother transaction even if bank accepts the short sale.

When pricing the subject property, we often have to look at the condition of the short sale and foreclosed homes.  Many times these homes need appliances, flooring, fixtures, landscaping, air conditioners, and much more.  Condition plays such a big part in comparing homes.  Normal sellers are competing with short sales and foreclosures, but they’re not always apples to apples and adjustments need to be made.

Using the Correct Comparables

Agents also look favorably on normal sales because they are rarely affected by last minute title, judgment, and lien issues.  I can’t tell you how many times HOA, utility, code enforcement, and other liens delay a closing on foreclosed and short sale homes.

Financing a normal home is much easier for a buyer because they can reasonably lock-in they’re interest rate.  It’s almost impossible to lock-in a rate on a short sale as you never know when you can actually close, and also true on a foreclosure if any of those last minute title surprises creep up we mentioned earlier.

Normal sellers need to keep their eye on the “Current” of the market.  Even though the normal seller has many advantages, the distressed sales aren’t emotionally tied to the home, so many times they’re more willing to look at what is actually going on in the market versus what they “Feel” they need out of home.  A bank or the investor may just want out and can afford to dump a property versus a normal seller who has worked hard for their money and need it for the next venture.

Never Chase the Market Down

In a declining market you never want to get caught chasing the market down. This is true for distressed and normal sales.  You really need to study the “Current” of the market and see what it’s doing, not only for the overall market, but also competing homes like yours.  Traditionally, sold comparables mean more than Active listings as anybody can ask anything for a property, but the proof is what others are willing to pay.

The market doesn’t rise or fall in unison for all properties.  It’s possible the market has bottomed and even started going up in certain segments of the market and still declining in others.  Recognizing where your home stands in the various sub-markets will be critical to pricing it effectively, and will offer you the greatest chance of selling, even in today’s market.

It doesn’t matter if the market is up, down, or sideways, pricing based on analysis is critical.  Marketing is especially important when buyers have many homes to choose from. Make sure you’ve discussed with your agent and have a clear plan based upon your property’s needs.  Marketing, pricing, negotiating, and solving the transaction puzzle are the keys to being successful in any market. We hope we’ve offered tips in two of those areas.

Good luck in successfully selling your property.

Last week we reported some preliminary findings on the local SW Florida real estate market pending release of official numbers this week.  Well, it’s official as the numbers are out.

The foreclosure moratorium has taken its effect on closings and prices.  Single family home sales were down 28.10% from last October’s figures, and down 7.8% from last month’s figures.  Median home sales prices were down 1.75% from last October, and down 4.66% from last month’s figure.  Median sale price for October 2010 stands at $90,000, essentially where they were back in 1996.

SW Florida Real Estate Single Family Home Prices Chart
SW Florida Single Family Home sale Prices

The shame of it all is that the temporary freeze isn’t going to cause more delinquent owners to stay in their properties.  If they don’t pay they won’t stay.  We are all in agreement that banks need to follow rules when foreclosing, and especially when evicting people.  As a practical matter prolonging the time a home sits before a bank can sell it hurts the neighborhood, the real estate market, and the economy.

The LA Times recently did a study on the effects of foreclosures on the market, and they compared California and Florida as sister states with closely aligned foreclosure statistics.  The California market is up in price about 20% from the bottom in April of 2009 versus Florida where prices are struggling to find a bottom in many parts.

The study concludes that California is more efficient and less complicated making it easier for banks to seize and resell homes when homeowners don’t pay.  Florida is one of 22 states that require repossessions to be approved by a judge, which adds time and tasks to the foreclosure process.  By extending the process, they’re extending the rebound time.

The LA Times article also looks at the Standard & Poor’s/Case-Shiller index which also shows prices up in many cities in California while down in the major cities of Florida.

We can’t change Florida’s law, so we’re stuck with the process of slowly bringing foreclosures to the market over time.  What we’re not in favor of is arbitrarily adding to that time.  We were especially critical of Obama’s foreclosure moratorium which slowed the recovery process back in 2009 by slowing down the process even further.

The government’s intention was to somehow provide retention for struggling homeowners, and while it was a noble cause it was a flawed scheme that wasn’t well thought out and did more harm than good.  If a homeowner lost their job, tacking on extra interest and increasing payments later on wasn’t going to make the home more affordable if the homeowner already couldn’t afford it.  Raising the payment later wasn’t going to help any struggling homeowner who was in trouble, and it certainly wasn’t going to help the market.

Real estate is 32% of GDP (Gross Domestic Product) which means it would ultimately hurt the economy as well.  The government finally got the message and laid off on the popular with voters but largely ineffective moratorium on foreclosures, and along came the bank issue failing to properly follow procedures on some foreclosures in those 22 states.

We are seeing the effects of that now which is prolonging the recovery.  Last week we predicted sales would be off 8.45% from last month’s numbers and official numbers indicate they were down 7.8%, so we were pretty close.  We do see some pent-up demand and an increase in pending sales activity which could bode well going forward.

We are going to keep a close eye on inventory levels, both distressed sales and non-distressed sales and pending sales.  We’ll track these against actual closings and monitor for any changes in the market.  So far since the moratoriums began Oct 1 for occupied properties, we’ve seen an impact, but there are signs this will be made up in coming months.  With season upon us we’d hate to miss any sales opportunities as buyers are buying sooner this year.  The sooner we get these properties to the market and sold, the sooner our real estate market can heal like California is doing and the sooner our economy can improve, which I think everyone can agree on would make for better times in SW Florida and across our nation.

The good news is the signs are there.  All we need now is time, action, and results, and with a little luck we’ll be on our way and 2005-2010 will be in our rear-view mirror.

This month is particularly interesting to study the latest real estate statistics as we really wanted to see what effects if any the foreclosure moratoriums would have on the market, and already we’re seeing some interesting data.  Watching these stats move feels similar to watching a heart monitor and patient’s vital signs.  I guess these statistics are the vital signs of our local market, so let’s dig in and see what the signs are telling us.

October Distressed Sales Chart Lee County Florida Real Estate
October 2010 Distressed Sales Chart- SW Florida

Some of these statistics interact with each other in a cause and effect way.  For instance, some foreclosure listings were pulled in October and distressed sales were down in October.  Distressed sales were up in Cape Coral, partly because foreclosure closings rose by 34 sales, and partly because short sale closings rose by 14.  Everywhere else short sales and foreclosure sales were down.

Inventory levels rose in Fort Myers 3.12%, but fell in Cape Coral and Lehigh.  Countywide inventory levels are up less than 1% from the previous month.

Closings were down about 8.45% in October from September levels.  Fort Myers sales were down 16.49%, Lehigh down 20.21%, but Cape Coral was up 6.88% over the previous month.  Cape Coral can be explained by the increase in foreclosure sales and short sales, and this may account for why the rest of the county’s sales were down as well, because the rest of the county’s distressed sales dropped.  So there seems to be that cause and effect in play we mentioned earlier.

Going forward pending sales are up county wide, and Lehigh Acres leads the way with pending sales up 5.44% over pending sales last month.  Cape Coral is up 1.92%, and Fort Myers is flat.  We track pending sales as pendings lead to closings, however not all pending sales close, so it’s just a vital sign we track.

We have noticed an up tick in buyer call activity and Internet traffic, so there is definitely buying interest in our market.  Banks have begun to release the foreclosure moratorium, so inventory levels may stabilize which will help transactions move forward.

Total distressed sales have fallen 4 straight months, but this could change as inventory levels have been driving sales numbers.  Demand is in the market and this is a case whereby supply is dictating certain aspects of the market.  Any disruptions to supply will temporarily affect sales numbers, and this should not be misinterpreted as decreased demand.  This past month’s results were supply driven.

Keep in mind these are internal tracking we compile and not official sales numbers which won’t be released until next week.

Where will the market head from here?  We believe supply will even out as banks get on top of some of the affidavit issues which plagued some of their foreclosures, and it may force some banks to work a little harder at completing short sales, which would be a good thing.

We are heading into season, and if this year is anything like last year, there was serious demand from our northern friends last season which could bode well again for this season.  This season “Feels” a lot like last season, as traffic has picked up on our roadways, as has real estate traffic, phone calls, and Internet traffic.  This season could be a chance to work down even more inventory, and it would be nice if that excess distressed inventory is available while the visitors are here rather than gracing our presence after they leave.  We’d just as soon sell and dispose of it now than have it come back and haunt us later when the demand might be less.

When it comes to supply, I say “Bring it on”.  We don’t feel holding it back shadow inventory serves any greater good and only prolongs agony later.  Others may disagree and argue that saturating the market further drives down prices, but so does an expanded process.

Ask anyone in the job market if they’d rather have a very deep recession lasting 3 years or a deep recession lasting 6 years.  I think most would rather take their medicine and get it over with so the healing can begin sooner rather than later.  Here in SW Florida we’ve been dealing with a declining market for 5 years now, and many would like to just get it over and begin that healing process.  We don’t want banks or government deciding to prolong the agony SW Florida has suffered for 5 years, as jobs and our local economy takes its cue from real estate.  The sooner we heal this market, the sooner construction jobs and the economy bounces back, and who wouldn’t be in favor of that in SW Florida bout now, or anywhere for that matter?

Visitors are here, pending sales are rising, and inventory is stabilizing, so let’s hope for a great season and a good 2011.

Like anything else, buying at auction can be a good deal, or a rotten deal depending on what you buy and what the terms are.  While there can be upside at an auction sale, the downside is much more frightening and should never be attempted without proper advice and education.

Is Buying at Auction a Good Deal
Is Buying a Home at Auction Always a Good Deal?

Each month we see big auctions advertised on billboards, newspapers and such touting bargains.  I’ve attended several auctions and I’ve learned many things.  In this article I’ll attempt to educate you on some of the things to watch out for that you might not know about.

Is Buying at Auction a Good Deal?

At one auction I noticed a group of people in front and another group in back.  One group kept bidding up the property to prices higher than market value and I wondered why.  Later on I discovered that when they won the bid for some reason they didn’t finalize a contract and the property went back out for re-bid.  This happened as many as 2-3 times per property.  At the end of the night when the crowd had thinned the property was purchased for much less by an investor who really wanted the property.  Essentially it was off the market all night tied up in contract sessions.

Another thing to look out for is reserve versus absolute auction.  An absolute auction means the property will be sold to highest bidder no matter what.  If it’s reserve, you never really know what the reserve is and they try and negotiate with you after you’re awarded the winning bid, so be prepared.

If you’re buying a condominium, or even in a homeowners association for that matter, I would look not only at the property, but also the association.  You may purchase and be the only one paying condo or HOA dues.  This may also make it impossible to sell your property to anyone but a cash buyer as lenders will not lend if the association doesn’t meet certain requirements.

Many are surprised to learn that the title work isn’t sufficient to actually sell the property.  Some have learned they may need to file suit to Quiet Title after they receive what they thought was good title to property.  There is a difference between insurable title and marketable title, and title policies today can exempt many things leaving you the purchaser holding the bag.

The property may also have many defects that aren’t known or get lost in the shuffle, and the buyer inherits them.  At one particular auction I’ve attended, once you put down your non-refundable deposit, you lose it regardless of whether you cannot get the mortgage (even if they promised to give you one at the auction) or if the property has major defects.  You simply MUST inspect the property beforehand or you will most likely be surprised afterwards.  I saw one home when the back half of the home was missing, and the buyer lost their deposit of 10%.  Additionally, if the air conditioner gets stolen prior to closing or damage occurs to property between auction and closing, it’s the buyer’s responsibility, so you are taking All the risks.

You also want to research code enforcement liens, fines for improper permitting, etc.  I had a house listed in Cape Coral with about $70,000 in fines, and a lot in Cape Coral with over $90,000 in fines by code enforcement.  We recently sold a $20,000 lot in Ft Myers with over $200,000 in fines.  In each case we rectified the problems before closing or didn’t close at all in the latter case, but this would not be true at an auction as the buyer would be stuck assuming those fees.

I attended one auction whereby the winning bidder put down their 10% and agreed to finance the unit through the bank at the auction.  They were approved on the spot for financing.  The problem is the property did not qualify because too many people weren’t paying their dues, and the loan was denied on that basis.  The new lender was the same lender selling the property at this foreclosure auction.  The lender obviously knew the property did not meet FNMA guidelines but they sold it to a buyer obtaining financing anyway, and in fact approved their loan.  The buyer was astonished to learn that after being approved, they were later denied, and their escrow deposit was being retained by the seller (the bank) for non-performance of the contract.

Like we said in the first paragraph, sometimes a good deal isn’t a good deal when it’s rotten.  You must thoroughly investigate the property, the association, the contract, the market, the financing, and the title work before you bid or you run the risk of being let down later.

If everything checks out to your satisfaction upfront, we would also encourage you to set limits on what you’re willing to offer so you don’t get caught up in the moment and overpay, only to find out later it doesn’t appraise and your loan is denied and deposit forfeited, unless of course you’re a cash buyer and don’t mind paying too much.

Like anything, an auction is just another way to buy and sell, and no matter which vehicle you use, please be sure to work with professionals and do your homework upfront.  You’ll be glad you did later.  Happy house hunting!

Many Realtors have mixed feelings on the effectiveness of open houses, and you’ll hear varying answers as to whether they should be utilized in marketing a home.

Some Realtors have grown tired of sitting an open house only to waste the afternoon away with no lookers or interest from anyone.  Other open houses are filled with prospects and it indeed helps sell that home, and maybe a few more in the area.  So what factors influence whether an open house will be successful or not?

Open House Weekend

Advertising an open house definitely helps.  Several weekends we’ve found agents with competing homes in neighborhoods we market open up the paper to see where the open houses were, then abruptly put up signs pointing buyers to their open house hoping to pick off a stray buyer and sell their listing.

The problem with this strategy is indeed the competing home may be located in the same area, but may not be posses the features in the ad that drew them to the open house to begin with.  Some agents promise open houses every weekend because they’re on a shoe-string budget and they win by either attracting a nosy neighbor who may be interested in selling their home, or picking up buyers who may not be qualified for the open house, but qualify to buy something else.  Either way the agent drums up business for free by using the seller’s home as a store-front to attract buyers.

We believe an open house can be an effective tool, but shouldn’t be used as the primary tool.  It’s simply an additional tool, and it may not be right in all instances.  For instance, if the seller is located in a gated community and the HOA doesn’t provide easy access on the scheduled open house day, getting buyers to the home can be difficult.

Open houses are a time when you’re showing the home to absolutely anyone and you’re never sure how qualified the person walking through the door is, or what their intentions are.  If a home has a lot of valuables or small personal items, it may not be wise to hold that home open.

We find that buyers just want to see the homes and get a feel for the market.  Online buyers want access to the listings first.  Agents can provide open houses via online virtual tours, and this can be especially helpful for rural properties, gated communities, or homes with lots of knick knacks.

If you’re going to do an open house for your tiny house, buyers generally want it to be worth their time, so holding several at once can be a tool to get buyers off the couch and out looking.  The buyer never knows which open house will capture their interest, but if there are several to look at, perhaps one will and it becomes worth their time.  It’s the same concept as builders doing a Parade or Homes.

We have a tour of 6 homes scheduled for this weekend, and we find that when we do multiple homes traffic at each home increases significantly versus holding just one home open. A list of homes we have on tour this weekend can be found at Topagent.com

All buyers want to see the goods (Listings) but some want to meet the Realtor and just get a comfort feeling on which agent might be good to deal with.  Buyers sizing up agents at open houses make decisions not only on the particular home, but on a possible agent to work with in the home buying process.

You can choose to open your home up, and doing so may produce mixed results.  Advertising helps, and having an independent 3rd party there to show your home really pays off.  Buyers rarely tell the owner what’s really on their mind as they don’t wish to offend, but finding this information out is critical to a sale.  Buyers will tell an agent things they would never tell the owner.  Too many times we’ve seen owners hold out hope for a sale because the buyers said how much they loved the home, when in reality they bought another and had little to no interest.  Or worse, sellers have refused to work with an offer because they felt a better offer was coming because they met the buyers and heard nothing but wonderful things about their home at the open house.  Sellers feel strung along when that offer never comes when the buyer seemed to rave about the home.

Open houses are not the end all marketing strategy, but if used in conjunction with an overall pricing, marketing, and sales strategy can be an effective additional tool and should be weighed with benefits and risks to ascertain whether it should be utilized in the sale of the home.

Discuss with your listing agent the pros and cons of holding an open house and with some planning and a little luck, it just might help you sell your home or find your dream home.

View our latest video SW Florida Real Estate Market Update-Foreclosures-October 2010

Last week we reported that distressed sales accounted for 63.27% of all single family home sales in August, and that a big shake-up was about to ensue as banks declared they were halting foreclosure sales at auction until they had time to investigate whether they’ve followed proper procedures.

Since that time Three major lenders (J.P. Morgan Chase, Allied Financial Inc. (GMAC,) have all stated they were halting foreclosures, but that doesn’t seem to be the case. Last week there were in fact several foreclosure sales to the astonishment of the banks who have instructed their local counsel to halt proceedings of final judgments until they study each case.

SW Florida Real Estate Foreclosure Market
Stop- Go- Caution

We at the Ellis Team handle foreclosure sales for one of the large banks and FNMA. FNMA says they have not been affected because they didn’t employ the robo signers the big banks did. The large bank we work with gave us orders on 10 new properties in the past 2 weeks, and we had a closing this past week.

To date title companies are still issuing policies and the banks are still closing sales, although we’ve heard reports of some cancelled sales by agents. Banks may be halting summary judgments, but in many cases they are moving forward with new foreclosures to get the process started, but holding off on the final judgment or auction sale until they know they are on solid legal ground with their paperwork. This is not necessarily stopping them from disposing and selling properties they previously foreclosed on.

So one has to wonder if the bank’s announcement was all a farce for publicity. The answer is probably not. These banks are large and decisions take awhile to matriculate down to all the branches. The implications are huge though.

What’s at stake is the bank’s legal authority to foreclose. Typically the bank makes a loan then services the loan after they sell the loan to an investor, often times as a group package in what is called a security. These loans are typically bundled together with many loans, and many investors may join together and invest in the security package. Other times an investor will buy individual packages of loans.

Because these original loans get bought and sold, there must be a paper trail as to who actually owns the security, and the right to foreclose against the borrower. Defense attorneys have long asked for the lender to produce the note, often called “Produce the note defense.”

Usually the lawyers would sign affidavits that they, or the bank does indeed have the note, and the judge would accept that. The reality is, the note and other paperwork may be missing and perhaps never found. Because of all this, some judges may no longer accept those affidavits, and many of these sales may be in question.
Some speculate this could happen in as many as 30-40% of the cases out there, and the answer is nobody really knows, not even the banks or attorneys right now. This is why banks and states have opened investigations. If this is wide-spread, it could have deep financial implications to the banks and investors, and we wouldn’t be surprised to see damage suits against the banks by those foreclosed upon where the paperwork was insufficient.

This very well could stall the process and tie up the courts for awhile, which could affect the real estate market. It would make sense for the banks to emphasize short-sales now that foreclosures could be delayed, but the banks don’t always make sense.

Inventory could dry up, and transaction volume could decline. Some speculate prices would be driven up fast and furious, but we’re not so sure. We’ve had high sales because prices have been at bargain prices. Unemployment is high, and the economy is hurting. Will prices rise just because supply goes down? In a balanced economy, we’d say yes. In this economy, we may just be prolonging the foreclosures further out and delaying our recovery. We hope this situation gets resolved quickly as nothing good results from a foreclosure moratorium. In the end, the property will still be foreclosed or sold, so no sense delaying it and letting neighborhoods decay and the market falter. Let’s hope this gets fixed and we all get back to business soon.

Watch SW Florida Real Estate Update-Foreclosures-October 2010 on video