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Wednesday, August 11, 2010

Psychic

The Psychic on Duval appears to be out of business.
Couldn't he see the future when he signed his lease?

On July 15th a reader posted this comment in regard to a property I had written about:
"There was a report released today and covered on CNN about a jump in foreclosures and news that banks are beginning to act faster on booting delinquent homeowners (or second or third homeowners) and also liquidating the houses more quickly.

Any thoughts about that from a local perspective? There are also reports that more high-end owners with mortgages are defaulting. I've noticed the foreclosure and short-sale numbers have been ticking upward again in Key West."

I questioned his/her source and was referred to a local real estate website. The commenter later added:
" Foreclosures were down in the teens for awhile but are up to 26. Short sales were also down around/below 100 and have moved up to about 110."
I made my own inquiry in the Monroe County Clerk's online records. I did a very superficial review of two fields that show the filing of new foreclosures (which occurs with the filing of a Lis Pendens). I did a similar review to determine how many Certificates of Title were recorded. (A Certificate of Title is the document by which the Court approves the sale of property at public auction through judicial foreclosure.) The results are shown below.

Number Lis Pendens Filed 2008 (1473) 2009 ( 1948) 2010 (609) [Jan to Aug]

Number of Cert of Sale 2008 (321) 2009 (721) 2010 (341) [Jan to Aug]


It appears that 2009 was just horrible because the number of foreclosures was very high and the number of Certificates of sale increased over calendar year 2008. When I saw the the number of Certificates of Sale for the first six months of 2010 was .5599% of the new Lis Pendens I almost started to believe the naysayers that the end of the world is near.

But then I stepped back and used by noggin. There is no definitive time link ( or certainty) between the filing of a Lis Pendens and subsequent issuance of a Certificate of Title. The time lag is quite analogous to the listing of houses for sale. Many are listed. Some are sold quickly. Other take months if not longer to sell. Some properties are withdrawn from the market and are not sold. Some foreclosures go quick and the property is sold at public auction. However, some owners hire lawyers and drag the foreclosure process through the courts for as long as they can get away with it. And some owners find a way to avoid foreclosure by selling through the short sale process or through a conventional sale.

I then reconciled the passage of time between the date the Lis Pendens was filed and the date the Court approved the judicial foreclosure bid amount and authorized the Clerk to issue a Certificate of Title. I assume that the large number of recent Certificates of Sale are from lawsuits filed in 2007, 2008, and 2009 that have wound their way through the judicial process and that finally got approved for court ordered sales.

I also did a simple comparison of the first six months of 2009 versus 2010 to see if there was an similarity of numbers or percentages.

Number of Lis Pendens Filed Jan 1 to Jul 1, 2009 1022
Number of Lis Pendens Filed Jan 1 to Jul 1, 2010 609
Percentage Difference -48.5% in 2010

Number of Certificates of Title Jan 1 to Jul 1, 2009 221
Number of Certificates of Title Jan 1 to Jul 1. 2010 599
Percentage Difference +200.7% in 2010

These numbers are for all of the Florida Keys. I am not certain that what happens in the other Keys reflects what is happening here. I look at the real property records every week but I only search Key West. What happens in Marathon or Key Largo does not concern me anymore than what happens in Altoona, Pa. What I do see are fewer new Lis Pendens and even fewer Certificates of Sale for just Key West.

I would caution readers to take what you see on any website that extracts raw data and converts it to use to fit into that website's format. I have been cautioning readers to understand that bad info into a computer database will cause equally bad info out. Not all agents nor their assistants fill out the mls listing data sheets completely or correctly. Some agents do not encode short sale or bank owned properties even though they are supposed to do so.

My answer to the reader who asked for a "local perspective" is that I believe the number of new foreclosures in Key West is down from a year ago and the number of bank owned properties is about the same this year as last year. What I have seen is more short sales are getting approved. The short sale approval process has gotten more efficient and a bit quicker. I would also caution readers not to infer what goes on elsewhere in the United States (or even Florida) is what is happening here. There is a huge pent up demand for housing in Key West. It is the high price of housing and the cost of construction that prevents our market from over-heating. But the demand is still there. You don't need to be a psychic to predict that people will always be looking for a place in Key West.

9 comments:

Jan and George said...

the psychic was remodelling...total makeover...check it out again...beautiful new interiors...JANGEORGe Interior Design, 600 Frances Street, Key West

Anonymous said...

Gary... who do you think truly sets the price of real estate? Realtors? Sellers? Or buyers?

Is it still a buyer's market? If so, is it reasonable to say the buyers are the ones who are dictating "fair" market price right now?

I don't think some of your readers are naysayers. I do believe they're practical and they believe there are some sellers (and perhaps agents) who are holding out for higher prices than the market will bear right now.

I'm not a realtor, but I'd imagine selling more homes at lower prices is better than holding out for over-priced homes to sell (or not, if the sellers "don't need to sell").

Thoughts?

Oh, and nice post.

Gary Thomas said...

Jan George is iright. And I made a faux pax.
Look at how cool the Psychic's shop looks today: http://tinyurl.com/25ueuy8

And as to who sets the price, it is the Buyer. The low end of the market in Key West is what is selling. Most of the higher priced houses are not selling. There are exceptions, however.

I may write about a property in this blog but I don't recommend houses that are priced unrealistically. Smart buyers can figure out for themselves whether a particular property is a good price or not. If I write that a property is a bargain, I mean it. I do not write things I do not believe.

I don't refer to my buyers as naysayers. Naysayers are not looking to buy. They want to stir up trouble and scare potential buyers. Real buyers may not make a purchase on their first or second trip to Key West. If they are like me, they make take several years to find the right place. But they don't give up on pursuing their dream of home ownership in Key West.

Gary

Anonymous said...

Buyers SHOULD NEVER set the price of their home Gary! I am ashamed you even said that!

As a fellow Realtor, I NEVER let the buyer set the price without an informed comparative market analysis of the area properties similar to that for purchase. How can a buyer make an informed decision without such knowledge?! They can not. That is why, as a real estate professional with years of experience, I am there to guide them in their decision.

Without information, the buyer is ill informed and unprepared to enter into a contract for purchase.

Also, take note that the purchase price must also reflect he buyer's ability to make the financial commitiment. And, of course, all is contingent on acceptability of the contract not to mention the home inspection.

Please Gary do your readers a service and let them know that not just one factor determines the price of the property but several in connection with each other will determine the outcome and final sale.

Anonymous said...

I think Gary's right on this one.

Buyers, and their consumer demand, set the price of a home. If a homeseller has had a house on the market for 180 days at $1.2 million and keeps rejecting offer after offer for, say, around $950,000, they're not getting the fact that the market (aka, buyers) are saying the house is worth $950,000.

I don't think it's wise or fair for a seller's agent to advise the seller to stick to their guns at $1.2 million if the market (aka, buyers) are repeatedly saying the house is not worth that. Especially in today's economy.

Listing agents need to be very diligent and honest with sellers today. Agents need to ask if the seller really wants and needs to sell. If so, then both should agree to price the house aggressively.

I don't understand why ANY homeowner would list a home in today's market unless they really wanted or needed to sell it. It especially doesn't make sense for a seller who doesn't need to sell to let a home fester at a high price in today's market. If you don't need to sell, then don't list the house. The longer it sits unsold, the more likely attentive buyers are going to view the property as troubled or, at least, unreasonably priced.

Agents and homesellers can assign a price to a home. Ultimately, though, it's the informed buyer who determines what the home is worth.

Today, the fact remains that many homes in Key West are not worth as much as some sellers and agents would like to believe.

Gary Thomas said...

To the Anon Realtor who wants to teach me how to sell real estate, please re-read what I wrote. The dynamics of selling a house right now are that sales are usually negotiated. A seller and his/her agent may set the asking price, but it is the buyer and the market that determines what gets sold and what does not.

The comment immediately above says it perfectly. "Ultimately, though, it's the informed buyer who determines what the home is worth."

Gary

Anonymous said...

Still there are sellers who want to list their home to "test the market" and see if their home will sell at the price they set. They are willing to wait for the one buyer who is willing to pay their $. They are in no hurry - It costs nothing to list. There are many homes in the KW MLS over 300, 400 even 500 days on market. Sure some have the original MLS number but a good many expire one day only to show up the next with a fresh new MLS number and an informed buyer who watches the KW housing market is not fooled by these tactics. It happened at the height of the market and it is happening today by the same few realtors in KW. so there is truth in the old saying --- there is no honor among thieves.

Gary Thomas said...

1) A Realtor that takes a "market testing" sale is a fool.
2) It "costs" Realtors time and money to list a property in the mls.
3) Not all Realtors are evil. Some miss expiration dates and have to prepare a new listing. It's not as easy as you may think.
4) Why do you want to paint Realtors as "thieves"?

There are some real jerks that sell real estate. Or that try to.

And there are some very competent Realtors that do their profession proud.

Gary

Anonymous said...

I've had some great experiences with Realtors. I especially appreciate those who've listed houses for me in the past and been very honest with me about pricing. Most homesellers are going to throw out a top-dollar listing price. The best agents are the ones who understand the sellers' needs, know the market and will make a strong case for the best price to actually sell the house. In my experience, even if I started with a high list price, the agents who wer honest about pricing in the first place were almost always right.

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Key West, Florida, United States
I first read about Key West in a magazine called "After Dark" sometime in the mid 1970's. But it wasn't until March 1984 that I made my first visit to the island that would become my home. I had two weeks for a vacation and reserved a room at Colours Guesthouse (now Marrero's Guest House) for one week. I thought that if I didn't like Key West, I could always go back to Miami or Ft. Lauderdale for the rest of my trip. But after a couple of days in Key West, that was no longer a consideration. But when I wanted to extend my stay for the extra week I found there was no room at the inn. The guesthouse owner did find me a room at LaTeDa, the infamous guesthouse/restaurant. That's a story I'll write another day. But those two weeks in Key West gave me the realization that I had found Paradise. Key West has been my home since 1993 and my only regret is that it took me so long to get here. I am a full time Realtor at Preferred Properties CRI. Let me help you find your new home or business in Paradise. Living in Paradise is not a slogan, it's a way of life.