Your Buyers Agent in Southwest Florida

Truthiness and Short Sales

2008-04-12T08:15:00.006-05:00

In order to understand the “Short Sale”, it is helpful to use the following terms:

Truthiness is a word that television comedian Stephen Colbert popularized to describe things that a person claims to know intuitively or "from the gut" without regard to evidence, logic, or facts.

short sale is when a bank or mortgage lender agrees to take less than the loan balance in full satisfaction of the debt owed by the borrower.

illusion -something that deceives by producing a false or misleading impression of reality.

specious - superficially pleasing or plausible though lacking real merit:

The Short Sale embodies all of these things. But those who think it is a magic bullet that saves the homeowner, are relying on truthiness. Here in SW Florida, the results suggest something quite different. Out of roughly 20,000 homes and condos that are for sale, approximately 4,000 are listed as “short sales”.

The question is “how many of these short sales listings are actually sold?” -- Less than 300.

What this means is that the short sale process does not rescue a substantial number of the troubled borrowers. The principal reason for this failure is the extended time, usually 2 – 3 months before a potential Buyer gets a response from the Lender Bank. In most cases, the Buyer becomes impatient and withdraws the offer or the Seller runs out of time and terminates the Short Sale process and eventually the Bank incurs another foreclosed property.

I think that the effect of increased number of foreclosures is still in its early phase in that the Banks are taking ownership of more and more properties. And the longer these properties “marinate” in the Bank’s portfolio of non-performing assets, the greater the pressure will be on Banks to significantly discount prices.

But we aren’t there yet… The Banks are still reluctant to aggressively discount the prices for these bank-owned properties. But it is just a matter of time. Sometime during the next 6-12 months, the wholesale discounting of bank-owned property will begin with speed and determination.

This will present a once-in-a-lifetime “Pricing opportunity” for Buyers. Buyers will benefit from the discounted prices for bank-owned properties to be sure. But the number of discounted properties will also undermine the normal market pricing dynamic and virtually all properties will be bargain priced. In the end, I envision prices returning to the levels that existed prior to the great housing bubble and run-up of prices.

It's Paradise for Canadian Buyers !

2008-04-05T14:08:00.019-05:00

It's Paradise for Canadian Buyers !

If you were a Canadian and came down to Southwest Florida in 2006, you found that buying your vacation home in Paradise was a most unpleasant experience.

In January of 2006, the Canadian dollar was worth only $.87 US. Consequently a four bedroom/3 bath home listed for $400,000 US but cost Canadians $460,000 Canadian. And so many Canadians saw their piece of Paradise as being more and more unattainable.

But here we are two years later. This home in Ft Myers has fallen from $400,000 to $249,000 today. It still has 4 bedrooms and 3 baths in a gated community and only 5 miles from the gorgeous beaches of Southwest Florida. However, now it costs Canadians $249,000 with the two currencies at parity.

For a home like this and many others, it’s a “Half-Price Sale” for Canadians !

So leave your “balmy” 32 degrees in “Ta-ron-ah” and come get your piece of Paradise where it’s 88 degrees today...

To see more, go to CharliePigeon.com

The Buyer’s Market has Begun !

2007-01-03T15:19:00.000-05:00

Huh… What Buyer’s Market??

The Seller’s market in real estate peaked in September of 2005. Historic trends suggest that the next Seller’s market might peak in another six to eight years. In between these Seller’s markets is what we’ve all been waiting for –the Buyer’s Market !

Let me tell you, the Seller’s market over the last 3 years has been no fun at all. In 2005, properties were appreciating at 5% per month. Buyers stood in waiting lines that lasted for months. It doesn’t take long to get priced out of the market. And as a Buyer’s Agent, it was frustrating to encounter a “take-it-or-leave-it” attitude from Sellers.

Some statistics…

In January of 2005, there were 3,000 single family homes listed in the Ft Myers MLS. This actually represented less than 3 months inventory and in reality, was a very tight supply situation. By December of 2005, the market had already peaked and the inventory had doubled to 6000 homes.

By April of 2006, the number doubled again to 12,000 homes. The expansion of the inventory of homes is still growing but at a much slower pace with the number of single family homes hovering just above 13,000 homes.

When you add condos and townhouses, the total exceeds 22,000 homes.

In Naples, the pattern is similar although the size of the market is roughly one-half that of Ft. Myers.

Some interesting observations…

· Inventory has grown due to the obstinacy of Sellers who refuse to accept reality and the immutable law of supply and demand. As we enter the winter high season, Sellers are hoping that we will return to the heyday before the market peaked. I am amazed that the Seller psychology is one where there is great comfort to be in the same boat with other Sellers and overpriced homes—all who are not selling either.

· The good news is that all Sellers do not act in unison. There are many realists who have substantially discounted their asking price to sell their property. As the market ages, the number of Sellers that actually want to sell their homes will increase.