Naples Bonita Springs Estero Florida

NABOR is the Naples Area Board of Realtors and on July 17, 2009 a press release was issued summarizing the June 2009 real estate results as well as some year over year statistics. The headlines are

SUMMER CONTINUES TO BE STRONG
[ed. I might add, it's pretty hot too!]
Report Shows 15-Month Inventory Trend Line Continuing To Decrease

What could be better? We have a continuing increase in sales volumes and inventory dropping, at a slow rate albeit. But, nevertheless it's dropping. With the large sales volume in the less than $300,000 category (see earlier blog posts), the decrease is indicative that the new foreclosures and short sale coming on the market is slowing down. Is this the light at the end of the tunnel?

For the area that NABOR tracks (Collier County except Marco Island based on MLS data only):

Inventory: Decreased 14 percent to 9,681 in the second quarter compared to 11,211 in the first quarter.

Average DOM (days on market):Decrease 19 percent to 161 in the second quarter compared to 198 in the second quarter of 2008.

Pending Sales - property under contract but not yet closed: increased 92 percent to 2,989 in the second quarter compared to the same period last year.

Single-family home sales: increased 48 percent with 1,093 in the second quarter versus 737 year-over-year.

Condo sales:increasd 26 percent with 942 in the second quarter versus 747 in the same period last year.

The press release went on to mention that pending sales in the $2 million plus category increased by a substantial amount also. See my previous blog post for sales trends by dollar category.

Real estate markets recover from the bottom up. Signs that sales of properties in all price ranges are increasing is nothing but good news all around.

www.BobPisa.com

In two out of four of the market segments charted, sales more than doubled from January 2009 to June 2009. In the under $300,000 category the increase is nearly double at 1.93X and the very high end, more than $1,000,000 category, sales are up a respectable 1.63X.

Both categories in the up to $500,000 segments have steadily grown and seem to have flattened out. While what was previously thought to be the "dead zone", $500,000 to $1,000,000, appears to be nicely increasing month over month.

We're smack in the middle of summer, the high volume categories have flattened out a bit and I expect this to hold true in July and begin to pick up late August. Bargain hunters in the greater than $500,000 market are getting serious and buying while the inventory is still strong and the selection is great.

So called "Chinese drywall" issues have been reported in the media all across the country with concerns about health and residential systems such as air conditioning and electrical wiring among others. Drywall is a material that comes in sheets of various sizes and thicknesses that is attached to the studs and ceiling joists to become the interior wall surface which is later plastered over and/or painted.

During the 2003 - 2007 building boom a shortage of drywall occurred in the U.S. which was compounded by major hurricanes (Charlie and Katrina) further increasing demand. This led producers and distributors to seek supply offshore - China. It has been reported that drywall produced in China may have high sulfur content. Sulfur, when combined with water will form an acidic substance and can cause corrosion to metals and possibly health issues also.

It follows that those geographic areas with very high new construction volume during the time period could see a higher incidence of Chinese drywall present such as Florida, Nevada, and Mississippi but not limited to those state. The Consumer Product Safety Commission has received complaints from 19 different states.

Chinese drywall issues, when discovered, are widely reported in the press. Certain large local nationwide builders/developers who build many developments and homes have a higher chance of discovering the use of this material. This is no guarantee that it's limited to these developments, builders/developers, nor is it proof that all homes in these developments were built with Chinese drywall. I am aware of affected homes where these builders/developers taking steps to rectify the problem once discovered.

Many homebuyers that I work with are from out of town, out of state, and out of the U.S. and may not even be aware of the potential issue. However once they hear of it questions, uncertainty, and fear arise. Some even ask for a guarantee that the property has not been built with Chinese drywall.

I work with home inspectors all the time. For homes built between 2003 and 2007 what they will tell you is that 1) they routinely look for "signs" of Chinese drywall (usually the tarnishing of air conditioning coils and other copper such as tubing and wire in the circuit breaker panel, reading the labels on the back of the drywall if accessible, and smell, and 2) there is no way to tell for sure unless you cut out samples (wall and ceiling since often different thickness material is used on each surface) and send the samples to a laboratory for testing. If the test results are negative and since you are only testing a sample, there is still no guarantee that there is no Chinese drywall somewhere in the home. 

When you look to purchase a short-sale or foreclosure property, the property is sold "as-is". The burden is exclusively on the buyer to determine the condition of the property, at the buyer's expense, and to decide to make the purchase or not.  

If the property is not short-sale or foreclosure it is unlikely that the seller will have intimate knowledge to state categorically that there is no Chinese drywall. The seller will usually state "don't know". Then it's up to the buyer, once again, to perform your due diligence and make your decision. However, if the seller or the listing agent is aware that the property contains Chinese drywall then this fact must be disclosed as is required by Florida statutes and likely similar laws in other states. 

That said, according to the multiple listing service (MLS), there have been 1,518 residential properties sold since 1/1/2009 in the area where the property was built in 2003 and later. The actual number is much higher as homes sold by developers during the time period are not in the MLS like my home, built in 2005-2006. 

This is a long way around to say it is highly unlikely that you will get a guarantee from anyone and certainly not with a short-sale or foreclosure. Employing a reputable and qualified inspector is important and performing lab testing if you and/or the inspector think it's warranted.

Update 8/20/2009: The Consumer Product Safety Commission ahs just opened a website on this issue.

The CPSC drywall website is located at: http://www.cpsc.gov/info/drywall

Please visit BobPisa.com

Short Sale Syndrome...The Lure, The Offer, The Closed Sale?

There is no question that the low prices posted for short sale listed properties is quite the lure. The president of a local REIA (real estate investment association) recently went so far as to say bait and switch! Actually, he used the word "chum". In fact while placing an offer for a short sale property recently, I asked the listing agent how s/he came up with the listing price because it didn't look quite right to me. The response was "...the bank told me to lower the price $100,000 (some 33%!) to attract offers..." There you have it, exactly what a lure is designed to do...attract.

I'm not saying that this pricing example is the norm (nor do I condone it) but I'm cautioning buyers about the attraction that may or may not lead to a closed deal and probably not at the listed price. However, over the recent past I have had success closing short sales for my clients. This is much better than in days gone by but it still a long process. Patience is a prerequisite.

What's the secret? Well there is no secret but basic homework, common sense, and a market analysis by your Realtor can make all the difference. There is a key ingredient though - the listing agent!

Short sale listing agents who do things right usually succeed. I can tell right away. How? The listing agent needs to be very proactive, involved with the deal, communicative, and insist that the seller have an attorney or other negotiator to turn the offer over to if they are not proficient at doing it themselves. I have two deals right now that feel like I threw the offer over the wall and I have no idea what's going on. In fact one of them could not even get a signed sale contract back to me by the offer deadline or even days past it and that's the easy part! Needless to say, we walked from that deal.

What should you do?

If you are selling, find a listing agent with experience doing short sales. Find out how many short listings s/he currently has and ask how many closed in the past 12 months. If the answer is many listings and few or no closed deals look elsewhere. Are you asking the listing agent to be the interface/negotiator with the bank? If so, look even harder at the track record. Realtors are in the business of helping clients buy and sell real estate. It's hard to do that when you need to spend hours each week on the telephone trying to work your way through the bureaucracy of a bank.

If you are buying, find a buyer's agent that knows the market and asks the right questions. Regardless of the listing price, the bottom line is determining what the value of the property is and then placing an offer that represents a good deal for you, the buyer, the bank and the seller. Remember, the bank will have the property appraised and they know full well what it is worth. Don't expect them to give it away. Would you?

Read more about short sales...Naples, Bonita Springs, and Estero, Florida

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