Most people don’t realize that their Home Equity Line of Credit (HELOC) could be facing some stiff payment increases in the coming years.  If you bought a home in the 2000’s chances are your lender discussed adding on an interest only line of credit to your first mortgage in case you needed money in the future.

 

Lines of Credit Payments About to Skyrocket

Home equity lines of credit origination chart by year
HELOC Origination Chart

Some people used the line of credit from the get-go to avoid paying PMI insurance.  It was an attractive option as it was probably interest only and the payment was affordable.  Many are as low as 3.25%  Rates are still that low today but the rates can go up at anytime, but that’s not what has the banking industry worried.

The part that wasn’t fully explained to consumers is that the interest only portion lasts for the first 10 years.  After that, the borrower must begin making principal and interest payments, which will add money to your monthly payment even if rates don’t rise.  But here’s the kicker.  The new payment is amortized over 15 years, not 30 years, so essentially you have to pay back the entire HELOC over 15 years in addition to your 1st mortgage.

Let’s say you have a 1st mortgage and a $200,000 interest only HELOC.  At 3.25% the HELOC monthly payment is $541.67.  With the new amortization that payment increases to $1,405.34  If it was based upon a 30yr amortization the payment would be $870.41, still a substantial increase.  Unfortunately it’s not, so get ready to pay a lot more.

Now, let’s assume the interest jumps to 4.5%.  These rates can adjust at anytime as the market changes, and most economists predict they will go up.  At 4.5% amortized over 15 years that same payment jumps to $1,529.99

You can see from the chart when the HELOC originations started jumping.  Many SW Florida homeowners are up against this reset now and many more will be hearing about this subject in the next few years.  It is a shock when you’re not expecting, but homeowners who act now have a chance to do something about it.

You can start making the extra payments voluntarily now which will reduce the principal when your loan does reset.  This also gets you used to the higher payments and allows you to budget properly.

For some this will not be feasible.  If you have equity now and good credit you might look at refinancing both loans into one mortgage.  It’s much harder to get a loan today than it was 10 years ago, but if you can that may be a great option.  If you cannot refinance, you may want to look at selling now, especially if you have equity.  It would be a shame to come up against the deadline and be forced into delinquency because you can’t afford the higher payments if you have equity.

If you are upside down on your mortgage, you can either start talking with your lender now or look at doing a short sale.  Nobody wants to go into foreclosure.  Many have resisted a short sale up until now, but a short sale is much better on your credit than a looming foreclosure would be.

We’re not here to tell you what you should do. That’s a personal decision and maybe one to be discussed with your attorney or tax consultants.  We are here to educate you on what’s coming and tell you about your options.

If you think you may want or need to sell, please give us a call.  We’re experts at looking at the situation and listening.  We’ll get you top dollar for your home and help you move on.  So many people have been locked into their homes waiting for the market to rise, and it has.  Perhaps the market has risen enough for you to sell now.  Perhaps it makes sense to down size, upgrade, and move to another location, etc.  We can help.  Give us a call at 239-489-4042  If you’d like to search the MLS first, go to www.Topagent.com and you can see what homes like yours are selling for.  Of course there’s no substitute for meeting with us and us evaluating your home.  We look forward to working with you to sell your home, or to buy one.
To search the MLS for properties go to www.TopAgent.com or give us a call at 239-489-4042 You can even search for waterfront property in Fort Myers, Cape C oral, or all of SW Florida    Good luck and Happy House Hunting!!!

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Brett Ellis Bio

 

Last week we showed statistics about the Lee County Florida distressed market and compared today’s numbers to each month dating back to August of 2011.  This week we’d like to illustrate how prices have fared and compare them dating back to 2009 for some perspective.

Sale Prices 2009-2012
SW Florida Median Home Prices

Median prices rose to $127,000 this year versus last August when they were at $103,200.  That’s a healthy 23.06% rise in prices from last year.  As you can see from the graph that shows the last 4 years of data, about this time of year we can have some seasonal price adjustments to the downside before they start heading back up around November.

Prices actually fell slightly from July 2012 to August 2012, down 2.23% from the previous month.  We don’t get too concerned about monthly swings as we like to look at overall trends.  The reason is certain properties may be scheduled to close one month and fall into the next month due to delays by the lender or title.  If 100 properties are delayed it just depends on the mix of properties and their prices as to how it affects the median price for the previous month.

This all works itself out over time.  As you can tell from the long term trend we’re riding high in 2012.  Foreclosure filings are close to the same levels in 2012 as they were in 2011 so it doesn’t look like there is a huge wave of foreclosure heading to the market.

We’ve had much uncertainty in the market due to the upcoming presidential elections as well as the tax increases headed our way in January.  Not only will we have tax increases but we’ll have certain job cuts which will ripple through the economy.  This has created uncertainty and made businesses reluctant to hire until these issues are sorted out.

We may start to see price increases about December, or the hangover from the elections may carry over into Main Street and help keep the status quo for awhile.

Ordinarily you would think we’d be poised for price jumps as inventory is down but we don’t think we’ll see the big price increases until jobs and the economy picks up.  We have several factors in play right now.  The old supply/demand theory is still in play, and we have to add jobs, income, and consumer confidence into the equation as well.

Assuming we get an actual plan to deal with our budget, and that’s a big if, businesses can start planning again.  If new taxes aren’t too onerous hopefully we can get a balanced budget and a plan that allows the economy to add jobs.  If and when this happens real estate is poised to take off in SW Florida.

If this d doesn’t happen real estate should hold its own and have modest gains over time.  Our prices are still pretty low even though they’re higher than the bottom in 2009.

The Ellis Team is selling homes.  We just opened a new Free MLS property search site people may find easier to use at http://www.AllSWFLrealestate.com/ Let us know how you like it.

Watch our October 2012 SW Florida Real Estate Update

 

If you have a home to sell you should talk to us. 239-489-4042. If you’re looking to buy your piece of paradise, let one of our knowledgeable and friendly buyer specialists guide you through the maze.  Give us a call; you’ll be glad you did.

Good luck and Happy House Hunting!

 

On April 17 rates are going up. How do we know the date? We know because that’s the date fees change under guidelines designed to attract private money into the lending system and reduce or eliminate FNMA, GNMA, and Freddie Mac, the three quasi-governmental agencies that insure mortgages and bundle them for securitization. They’re not really governmental, but they might as well be as the government has funded them until now. They are private companies that pay investors profit, but tax payer funded when they lose money, so something had to change.

Big Changes Coming in Mortgage Market

Big Changes Coming in Mortgage Market
Interest Rates Will Rise in April

So what is changing? First off, rates are going up. This will increase yields, which will attract banks, hedge funds, and other large sources of capital into the market. Large companies will actually compete to make more of this money. A lot of money has been bottled up sitting on the sidelines and this may be the conduit to free up that money.

When rates go up, home prices usually go down. Not so fast! In this case, prices could eventually rise. Many ask how this could be. The answer is complicated, but noteworthy, so we’ll do our best to explain.

Under the new guidelines guided by this resource from Wealthy You to get the best priced loans, borrowers will have to put more down. The old 20% down will now be 30% down. However, credit scores will also be lowered for qualifying. Imagine many of those people that sold via short sale being told they wouldn’t qualify by FNMA for 5 years. It turns out they may be eligible after just 12 months under certain conditions.

This source for a mortgage lending company in Kansas City KS says, while rates may go from 4 7/8% today to possibly 6.5% in April, more people will qualify. We still have FHA for low down payment options. Some people are predicting another real estate boom coming sooner than later nationwide as pent-up demand for housing intensifies, and more borrowers being eligible to purchase.

Imagine having a 540 credit score and being able to purchase a home. Those days may be coming again, if you can scrape together a down payment. Home prices are artificially too low in SW Florida and are in fact below replacement cost. This has caused multiple bidding situations for prestigious properties in short supply even in the upper price ranges in certain parts. Naples and Bonita have experienced a resurgence in prices, and many feel this is bleeding north up into Estero and Fort Myers. We are currently being driven by 2nd home buyers looking for deals.

As prices get closer to replacement cost, building will begin to pickup, which will bring jobs. As the SW Florida economy grows, the real estate market could gain traction very quickly, especially with Snow Birds and existing residents qualifying sooner than expected for their next mortgage.

Keep in mind 7,000-10,000 people are retiring or entering the social security income stream everyday. Florida stands to gain from the Baby Boom generation relocating or buying 2nd homes.

Many on Wall Street are anxious to cash in on the looming change to the capital markets coming in April. In fact, Wall St is waiting like a tiger to pounce. Some are predicting a feeding frenzy for housing and rapid price gains.

Some people believe the change to FNMA and Freddie Mac will damage the markets by increasing borrowing costs and raising down payment requirements. Others believe borrowing was next to impossible anyway the last few years and banks only lent to those who really didn’t need it. I don’t know who is right, but I will say if we open the door for more people to buy, the market could recover quicker than most expect.

2011 could really be a year to watch and keep an eye on the financing markets. If Wall Street gets greedy like last time, it could be a boom for real estate. The difference is, FNMA and Freddie Mac, and the US taxpayer won’t bail out bad loans, only systemic losses due to financial meltdowns. Hopefully we’ll enjoy the next boom with no meltdown, and higher down payments will help with that. If our markets stabilize like we think they will, even low down payments won’t affect the market because the market won’t be in freefall, and we’ll be adding jobs to the economy versus losing 8 million like we’ve done the past 3 years.

Bottom line, keep an eye out for sunny days ahead in the real estate market and we just might see them sooner rather than later. And mark your calendars for April 17. This will be the beginning of something. Time will judge the ending.

Pending sales lead to future closings, so studying pending sales over time offers a glimpse of what may occur in the 30-60 day future.  Obviously not every home closes, but it is a good barometer of what may close.

Nationally numbers were released this past week and pending sales increased 5%.  The SW Florida real estate market pending sales increased 4.11% over the previous month which is pretty much in line with national numbers.

Pending Home Sale Graph Fort Myers-Cape Coral
Pending Sales Fort Myers Cape Coral Florida Area

Pending sales are down 18.67% vs. pending sales last August, and this is in line with official sales numbers.  In July, sales were down 27% vs last year, so maybe when official numbers are released for August we won’t be down as bad as we were for July.

We’ve noticed a trend the last few election cycles whereby when people are uneasy about their jobs or the economy real estate sales tend to fall off just a bit in anticipation of the next election cycle.  Suffice it to say the November elections are on people’s minds, and how could they not be with all the ads on television during the primaries.  It is an encouraging sign that pending sales picked up in August over July.  Last year August sales were down slightly over July, so August isn’t always a month where we expect them to increase.

Interest rates are at record lows, and we’ve seen buying power in the $150-$300,000 price ranges increase substantially.  We believe sales could increase in this price range going forward into the next year as buyers realize they can buy much more home for far less money than they thought they could, even 1-2 years ago.

Inventory Levels in Fort Myers, Cape Coral, and Lee County Florida
Single Family Home Inventory Levels - pending Sales

As you can see from the attached chart, inventory levels in the Fort Myers and Cape Coral areas have been holding steady, and this is also true countywide as well, although the numbers are larger.  We’ve included a detailed pending chart as well showing pending sales from last year to present.  We’ll keep reporting what happens going forward on current real estate trends in SW Florida.

Be sure to check out our SW Florida Real Estate Market update for September directly from our Future of Real Estate Channel.

It’s that time of year again.  Final sales numbers are in, and we can accurately reflect on where we’ve been and where the market may be headed in 2010.  Each year we release the most comprehensive statistical report on SW Florida residential real estate, and this year’s report uncovers some interesting observations. 

Single Family Home Sale Prices in SW FLorida 2008-2009
Single Family Home Sale Prices in SW FLorida 2008-2009

Last year we said we really need jobs and employment to fix housing and that is partially true.  A bottom seemed to form even without jobs and housing as investors came in and competed with first time home buyers for the best bargains.  Never before have sale prices been so low as compared to rents as to cash flow for investors like we’re seeing now.  This investor boom is much healthier now than back in 2005 as investors are helping to clear the foreclosure inventory, clean up the neighborhoods, and provide stability and capital until employment returns to the local economy.  The underlying investment makes sense at today’s numbers, and in fact still has some room for price gains going forward as well.

 We also talked about the true test of a bottom last year.  “Sales volume increases, inventory levels stabilize, and prices stabilize.”  2008 saw 2 out of 3 so we speculated that 2009 might bring all 3 into alignment, and this is what occurred.  2009 saw all 3 factors come together and in fact median home prices really firmed up the 2nd half of 2009. 

Sales in 2010 were up 92.11%, month’s supply of inventory fell from 17.53 months last year to 7.11 months this year, and both the median price and mean average sale price for single family homes rose in the 2nd half of 2009.  All 3 signs point to a bottom that was reached in 2009. 

Is every bottom firm?  Just look around and you’ll see the answer is no, but we think the real estate bottom should be, as investors seem to have set the floor by scooping up everything they can because it makes financial sense.  The phrase financial sense is a far cry from the speculators we saw in 2005.

 So let’s give out some interesting facts from this year’s data: Last year we reported 9,207 sales.  This year we report 10,021 sales that sold at $100,000 or less alone, and 4,651 sold from $100-$200k.

 8,051 homes sold at or above full price last year.  That’s almost as many homes as sold in all of 2008.   Anyone who bought or tried to buy real estate in SW Florida last year knows this, as offers on properties were fast and furious.  That equates to over 45% of the homes selling at full price or better.

 So how did the county do on prices?  We’re down in price, but most of those declines were 1st half of the year vs. 1st half of 2008 numbers.  Much of the declines were year over year, and we believe prices could start showing gains year over year in 2010.  Countywide we’re reporting median prices down 38.82% and average price down 40.23%  This won’t make sellers happy, or government that relies on taxes to pay for services, but government better get ready for less very soon, because when the Lee County property appraiser comes out with their numbers later this year, it won’t be a gain.

 So which area of the county fared the best?  Our data shows Sanibel/Captiva fared the best, with a 18.51% price drop in media price and 19.45% drop in average price.  Sales were up 28.97% last year in Sanibel/Captiva. 

The headlines will read market is down close to 40% in price, but that’s not the real story here.  That was year over year data, and is primarily affected by 1st half sales.  2nd half of the year sales firmed up in price, and going forward there’s an excellent chance we’ll see some price gains year over year.  It really depends on future foreclosure activity, jobs, and the economy.  So don’t get hung up on the -40%.  Look at the trend of prices for all of 2009 and we think the data speaks for itself.  We’ll post a price graph from the report illustrating 2008-2009. 

Download your free copy of the State of the Market Report. You can look up all parts of the county, as we know, all real estate is local.  This is just a snippet of data contained in the report.

We’ve been compiling our annual State of the Market Report which will be released soon and this year more than any other some interesting trends are developing.  Full time agents tend to get caught up in the deals they’re working on and could miss some of the major trends developing in the overall market.  It is always so interesting to analyze the overall Lee County real estate market, and then dissect down to the smaller sub-markets and see what story the data conveys. 

This past week I asked several full time agents who work with a lot of buyers if they could tell me what they’re seeing on a day to day basis.  I then compared what they said with the data we’re compiling to see what they story is. 

A few themes developed from their stories.  The first theme is many buyers have heard Florida is on sale, so they come down here with unrealistic expectations about what they can buy.  Agents are receiving unrealistic requests for things like gulf front homes or condominiums 1 block from the beach with a garage, built in the 2000’s for $100,000 or less, or waterfront gulf access homes, 3 bedrooms, 2 baths, built in the 2000’s for $150,000 or less.  The stories go on and on.

 

Year End Prices 1993-2009
Year End Prices 1993-2009

Many buyers want to look at bank foreclosures, but they don’t want to do any work if it needs repair.  They expect all homes should sell at the bank foreclosure prices regardless of whether they need work or not.  Many buyers feel the foreclosures set the prices in the neighborhood even though they may be missing a kitchen and needs tens of thousands in work.  Buyers are quite often dissatisfied with the condition of the distressed properties, but they don’t want to look at a regular home that is all fixed up because it is not a perceived bargain. 

You could take two identical homes next door to each other, one being a foreclosure and needing $15,000 in repairs and another being a normal sale and in excellent condition.  The bank foreclosure might be priced $15,000 below the normal home, but when the buyer sees it they’re turned off.  They’re also turned off by the price of the normal home because they feel it should be priced $15,000 lower.  Many times there is a reason a foreclosure is less money.  It takes money to fix them up, not to mention time and effort.  Not everybody wants to do that. 

Another theme is buyers have no idea homes are selling as quickly as they are.  Many buyers are looking around and because there is some inventory believe they have time.  Many are not motivated to pull the trigger because they believe that home, or one just like it will be on the market in 6 months or next year.  Buyers do not believe these homes are receiving multiple offers and being scooped up by investors who can actually cash flow them at these low prices. 

The emotional buyers are seeing fault with the homes and are afraid to buy.  The studious investor is beating the regular buyers to the punch because they know these homes will be selling for more in the future, and they can actually rent them out and make more return on their money than other investment vehicles.  These homes make financial sense to investors on both ends of the spectrum. 

The regular buyer is operating out of fear and lack of knowledge about the local market.  After they miss out on several properties to higher bidders it becomes apparent to them this market is much more active than they actually thought. 

The SW Florida real estate market is on sale, but it’s the old herd mentality buyers follow.  Buyers tend to be most motivated when everyone else is buying, usually at the height of the market.  It’s true in the stock market, and real estate market.  Back in 2004 and 2005 people couldn’t buy fast enough, sometimes buying groups of homes.  Would you say buying a home back in 2005 was a better investment than buying one in 2010?  And yet the motivations were higher back in 2005 because people weren’t afraid, when they should have been.  2010 is a far greater opportunity, and the people who study the market realize it. 

Later this week we hope to release our State of the Market Report at www.Topagent.com  so you can analyze what properties are selling the best right now, analyze where the inventory is, and what prices are doing on a monthly basis.  Being informed will help you make a better buying or selling decision.  It makes no sense to miss out on opportunities because of lack of local market knowledge just as it makes little sense to overpay, or list at the wrong price either.  If you list too high your property won’t sell, and if you list too low you’ll be giving equity away to someone else who is more informed than you.

We have all questioned what happened to the stimulus funds only to find that there are monies available from the package in Lee County here and now.  The word needs to get out. It is imperative that those who qualify and have a desire to own a home apply for the assistance. Getting people in homes as a result of this funding will inadvertently benefit the market in all price ranges and all sectors.  We will cover that aspect later.

There are currently two programs with funds available: 

HOME DOWN PAYMENT ASSISTANCE   Qualified persons or families can receive up to 20% (not to exceed $20,000) of the purchase price for a single family home.  The single family home must be located in unincorporated Lee County and could be a condo or PUD (Planned Unit Development) or even a double wide mobile home 1976 or newer provided the land is owned underneath the mobile home. The home cannot be a duplex, have an attached or detached mother in law quarters or have a swimming pool.   If all of the funds are not utilized as either down payment or closing costs the balance of the funds will pay down the principal balance.  The funds cannot pay debts or collections, home inspection fees or home repairs. 

The homebuyers household income must meet HUD guidelines. The income for all members of the household will be considered.  Non occupying coborrowers will be considered on a case by case basis.  The home must be affordable for the occupants so the income of the non occupying coborrower will not change the mortgage amount  or sales price.  The coborrower may enhance the credit worthiness.  All assets (including interest income)  will be considered when calculating annual income such as checking/savings accounts, IRA’s, CD’s, cash value of life insurance, etc.. 

Income Limits-HUD Guidelines for Down Payment Assistance
Income Limits-HUD Guidelines for Down Payment Assistance

HUD guidelines 

A ten year second mortgage will be placed on the property.  No interest will be charged and there are no monthly payments.  At the end of the ten years and if the property has been occupied and homesteaded each year a satisfaction of mortgage will be given and the second mortgage will not have to be repaid.  However if the property is sold or leased during the ten year term or not owner occupied or homesteaded, then the prorated balance of the second mortgage will be due and payable.   The second mortgage is self amortizing and will reduce 10% per year.  Does anybody check?  We are told this criteria will be verified. 

The property must pass Lee County’s minimum housing quality standards inspection.  The inspection will be performed by the Department of Human Services inspector.  The house must not exceed HUD guidelines for the number of persons allowed per bedroom.  The property must be existing and have had a certificate of occupancy for at least one year.  It cannot be occupied by tenants that are not purchasing the home. 

There are other rules and regulations all of which make sense and are easy to work with.  Funds are available on a first come first ready basis.  It would make sense to this writer that you get yourself in position to receive the assistance if at all possible. 

The lender applies for the assistance from Lee County on the borrowers behalf.  The lender completes the lender referral form and several required documents including a fully accepted purchase contract.  There is a $50 charge which can be paid by cashier’s check or money order from the purchaser.  Make this non refundable application fee payable to Lee County BoCC. 

NEIGHBORHOOD STABILIZATION PROGRAM 

Lee County is now in the business of buying and rehabilitating foreclosed homes in targeted areas and then selling them to buyers at prices less than what was paid for them.  This is all possible due to the $18 million infusion of stimulus funds.  First of all, the county purchases properties below the appraised value.  Professional contractors go to work on them making the properties very good buys in price and condition.  The county will not raise the price of the homes as the economy improves.  These homes will stay affordable. Some of the target areas include Lehigh Acres, San Carlos Park, East Ft Myers, North Ft Myers, South ft Myers, Pine Manor and Page Park.  Go to nsp.leegov.com to view maps of the target areas. 

The incredible part is that the county will provide a silent second to the home buyer which means that the county may have purchased a home for $60,000 and then spend $$$ fixing it up and sell it for $30,000.  The buyer is paying on the $30,000 mortgage.  If the buyer stays in the home 15 years the silent second is forgiven.  If the buyer decided to sell, rent or refinance before the 15 years have passed the buyer may be obligated to repay the subsidy partially or in full. 

This program is not for investors or second home buyers and only for the buyer’s primary homesteaded residence.  The NSP program is not restricted to first time home buyers but the buyer cannot currently own a home and must be a resident of the United States.  Buyers accepted into the program must complete an 8 hour homebuyer education class. 

Take a look at the income guidelines for a pleasant surprise. 

Down Payment assistance From the County
Down Payment assistance From the County

The NSP program looks at the income of the buyer from a low, moderate or middle range. The low income buyer can get up to 50% of the sales price as a silent second subsidy.  The moderate income buyer will qualify up to 40% of the price of the home and the middle income buyer at 30%.

As you can see from the enclosed chart, short sale listings account for 53% of all active Cape Coral listings, 55% of Lehigh Acres listings, 35% of Fort Myers listings, and 40% of Lee County listings. While foreclosures account for more of the completed sales in Lee County, there are far less of them listed and they tend to go very fast.  Short sales on the other hand tend to take much longer, and their sale is not certain at all.  So we want to inform people of some of the things they should know about short sales.

Chart of Homes for Sale-All listings Vs Short Sales
Chart of Homes for Sale-All listings Vs Short Sales

A trend we see developing is many banks are requiring sellers to participate in the loss and pay money at closing, or agree to a promissory note that the bank will collect on.  Sellers should be very cautious not to list the property too low or the bank will reject the offer outright if it’s not within reasonable value, and they are coming back on the sellers regardless of whether it’s a homesteaded property or investment property.  Banks may not file a 1099 to the IRS on a homesteaded property, but they are in many cases on investment properties.  The forgiven debt has always been treated as income to the IRS, so if you take a loss on an investment property, prepare to pay taxes on the forgiven debt regardless of your ability to repay. You can contact experts to help if you’re looking for a property rental management company.

This is another reason why selecting an agent with experience in short sales is critical.  Not only must the agent understand what the banks want to see in the total package, they must also understand what the banks are doing today and their implications to their clients. Agents are not tax advisors; however agents can pass along valuable experience before you go through such an ordeal.

Buyers are very wary of buying short sales, as are buyer agents.  Buyer agents typically only show listed short sale properties when they know the listing agent has a firm grasp on All the details needed to get the short sale through.

A listing agent should also make sure there is a title search done.  If you miss a potential lien on property and do not list it on the estimated net sheet the bank requires, it will not be part of the accepted short sale and the seller or buyer must pay the difference at closing.  It definitely pays to know all the back fees and penalties from HOA’s, utility companies, etc. upfront versus finding out later on and having the short sale deal blowup at closing.

You’ll usually want an estoppel letter from the homeowners association showing all back fees, because in a short sale they will need to be paid off.  In a foreclosure the HOA may only be entitled to recover 6 months of back fees.  This is one reason HOA’s should be more cooperative in providing this data. Many homeowners associations don’t realize their management companies are charging large sums simply to provide an official amount the owner may owe.

We also recommend sellers pay their HOA fee even if they are delinquent on their mortgage.  Time is valuable in a short sale, and the HOA could actually file foreclosure papers much sooner than the bank might.  When the clock is up, the short sale is dead.  I can’t tell you how many homes we’ve seen listed as a foreclosure after the banks supposedly agreed to a short sale.

The bank(s) should only see one accepted offer from a seller.  If a bank sees multiple offers it gums up the works, and sometimes leads the bank to believe it is a Hot property and should sell for more.  Nevertheless, it increases the time it takes the bank to respond as it is much more work, and we should do nothing to increase that time.  Furthermore, there is a legal risk by accepting more than one offer.  The offer is between buyer and seller.  The bank cannot agree to a short sale unless seller agrees with a buyer.  The bank can only tell you what they’ll do if you have a sale.  A seller could have legal problems if more than one buyer believes they have a valid contract with the seller.

We also don’t believe in sending in fake contracts to get the ball rolling with the bank.  When banks discover this tactic they are less likely to work with you.  Additionally, there is no such thing as an accepted short sale price. If you lose a deal, typically you have to start all over and the terms usually change.

There is a test program that is an exception to this rule on HUD properties, but that price is set upfront and has nothing to do with previously accepted contracts.  There are many other things a buyer and seller should know.  To view a video segment on HOA’s and management companies, visit segment 2 of last week’s Future of Real Estate Show.  http://bit.ly/8pfMMf  or you can visit http://www.youtube.com/brettellisfl for many real estate related videos.

May 2009 Ellis Team SW Florida Real Estate Current Market Index
May 2009 Ellis Team SW Florida Real Estate Current Market Index

 

The Ellis Team May 2009 SW Florida Real Estate Current Market Index shows relative stability.  We switched the way we compile the data for this report, and it looks like the index held steady at 3.99, up slightly from 3.72 the month prior.  All signs point to big sales ini April once they are released.  We are tracking over 1,400 single family home sales in April, which far exceeds sales from last year.

In the coming days we will be releasing a Fort Myers-Cape Coral inventory chart which will show available inventory in just those areas, as well as pending sales activity.  Lee County overall single family inventory stands at 12,579 which is up slightly from last months number of 12,356.  Again, we switched data compilation sources and we now feel we’ll pick up a few extra listings by making the change, so it’s possible inventory didn’t really increase at all.

First time home buyers hoping to take advantage of the $8,000 tax credit are competing with investors trying to scoop up bank foreclosure bargains.  Pending sales currently are running high, and might even be higher if we weren’t running out of foreclosure inventory.  The lack of foreclosure inventory may lead to reduced sales going forward if foreclosures do not pick back up again soon.  Some think the banks will be taking possession of more foreclosures soon as they work through the process, but less are being filed each month.

Current Market Index-SW Florida Real Estate-March 2009
Current Market Index-SW Florida Real Estate-March 2009

The March 2009 Ellis Team SW Florida real estate Current Market Index covering Fort Myers, Cape Coral, Bonita Springs, Estero, Ft Myers Beach, Sanibel and Captiva Islands, and Lehigh Acres Florida improved again as sales activity has really taken off in the past 6 months.  The Index now stands at 4.41 for Cape Coral and Fort Myers, and stands at 5.07 for the entire Lee County Florida.

Inventory levels countywide hade dropped to just slightly over 13,000 while pending sales have shot up to 2,567, and increase of 22.53% since last month.  The market is absorbing new inventory.  This 2009 season has been as good as predicted.  remember, the Current Market Index is a forward looking indicator, and home sales have been bearing that out each and every month as we’ve been reporting.

Cape Coral again leads the way.  The CMI numbers for Cape Coral are 3.45, the best in SW Florida.  Condo numbers were down to 10.90, down from 13.08 in February, another positive sign.  We do see some serious trouble on the horizon for the condo market in SW Florida we’ll be reporting on later.