Key West Real Estate Horror Story No.1

People who read my blog are typically looking to purchase a home in Key West. They usually find my blog by searching an address after viewing a property on Zillow, Realtor.com, or even the real Key West mls website. These new prospects often read additional blogs I have written to get a sense of who I am as a person and the services I may be able to provide to them.

Many readers think that they can get a deal by buying a bank owned home because they think they'll get it at a bargain price. During the past couple of years some bank owned properties have been offered for sale via several online auction websites.  I have helped several buyers purchase homes through these sites. One particular online auction turned into a real estate horror story.

I registered the buyer and myself as his agent so that I could be a part of the process and earn a commission if the buyer was the successful bidder. I read the TERMS before signing up.  I warned my buyer up front that the standard Florida Purchase and Sale Contract would not be used but that the contract written by the online auction company would be used instead. That contract was totally written to benefit the bank as seller. I used to be a lawyer. The law describes this type of contract as a contract of adhesion. The thing is if a buyer wants something so badly, he'll probably sign anything just for the chance to get a good deal.

My buyer was the successful bidder in a particular online auction. Thus began the saga that became a minor real estate horror story. After my buyer's bid was accepted, the buyer was required to sign the bank prepared purchase contract - the contract of adhesion I mentioned above. I did my part by providing all the documentation to the bank asset manager who is located in a faraway town.

My buyer was paying cash so there was no third party mortgage involved. The house itself was a total mess. My buyer did not do an inspection as the buyer planned to do a major renovation.

Within the first week or so we received a preliminary title report which showed that the law firm that foreclosed the mortgage omitted a necessary party to the foreclosure' This required the attorney to do a new foreclosure the omitted party. This set back the closing date by several months. Just about the same time my buyer became aware that someone had complained to City of Key West Code Enforcement about yard debris and trash in the front and back yards on the house upon which my buyer had a contract. The City of Key West Special Master imposed a daily fine of $250 on the property until such time as the mess was cleaned up and the fine paid. I got a copy of the FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER and emailed a copy to the listing agent, asset manager, and closing agent all located at the same address in the faraway Florida city. All of the asset management people and title people had Muslim last names except for the real estate agent. I checked with the Florida Real Estate Commission - he is a real person who lives in Florida.

 When neither the listing real estate agent nor the asset manager responded to me, I called both. I left a voice message for the real estate agent. The agent never returned that call nor did he ever respond to any email I sent to him. When I called the asset management company I asked to speak to M**** Mohamed, the asset manager. The first person I spoke with sounded far away, much farther away than the address in Florida where the asset management company's office was located. It was as if I was talking to someone on the other side of the world or that I was speaking on a tin can phone or both. I was asked to call back at a later time. I did and that is when I spoke to Mohamed. I knew then what I suspected earlier that I was talking to someone in India or Pakistan and not in Florida.

I told Mohamed about the code violation and ongoing fine. He asked me to send him a copy of the FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER which I had previously sent to him. I did. Then we began a series of email correspondence about the ever-growing fine.  A few weeks into the process Mohamed assured me the problem had been resolved. He said he initiated a process to hire a vendor to clean up the yard.  During the meantime my buyers left town for a previously planned vacation. I drove by the house to see if the place had been cleaned up. The front yard looked okay but I could see trash in the side yards. I went to the backyard where fallen palm fronts and other debris littered the yard. I took photos. Then I went to City Hall to speak to someone about the property. I was informed that the city would hold my buyer responsible if the bank owner did not clean up the mess and pay the fine by the time we closed.

About five months had passed since the new foreclosure was started.  The title agent emailed me a notice the bank was ready to close. I sent emails to Mohamed and others at the asset management company stating that the code violation constituted a title defect and that the buyer required the bank to pay the fine and get the code violation cleared. Mohamed and the title agent sent a series of written in English but which either intentionally or accidentally never stated that the bank clear the code violation and pay the fine before closing.

I re-read the bank purchase contract (the contract of adhesion). The contract specifically excluded the bank as being responsible for any code violations. I then engaged a local law firm to write a letter to the bank asset manager and title company reaffirming the buyer's position that the code violation constituted a title defect.  Mohamed and the title agent became more responsive to the lawyer who communicated in a non-threatening manner but simply required the bank to clear the title defect before closing. I went to city hall and got a form by which the bank could seek to mitigate (reduce) the amount of the fine which by then had risen to over $20,000. Remember the fine was $250 per day.

I sent the mitigation form to Mohamed who said the contractor he hired to clean up the yard had done so. I told him that whoever he hired picked up trash in the front yard but not the side yards or back yard. I told him emphatically not to mess the government. He finally got the message. The bank extended the closing a few extra weeks so that it could appear before the Special Magistrate to mitigate the fine. The yard was cleaned and the fine was reduced to only $15,000. The bank paid the fine at closing.

But that's not the end of the story. The TERMS disclosed at the online auction site were less than forthright in disclosing all the fees that the buyer would be required to pay. The biggest and most offensive non-disclosure appeared when we received the preliminary settlement sheet. The buyer was required to pay the Seller's State of Florida Documentary Stamp Tax which is calculated at 70 cents per one hundred dollars of sales price. This is always a seller cost, but under the bank's contract shifted this expense to the buyer. While the bank paid the title policy, all of the other title closing costs were likewise shifted to the buyer. The buyer's sole remedy upon learning all the associated fees would be to walk away from the contract, lose his deposit, and not get the property. Buyers do what buyers do: they suck it up and pay the fees.

My buyer closed on the property and got a really good price on what will end up being a very nice home once the renovations are completed. It could have ended differently, however, had I not kept pressing the bank to clear the code violation and pay the fine.  I can't help but wonder if anyone at the real bank with all the Billions of Dollars in assets has any knowledge that the bank asset management company in Pakistan or where it is that Mohamed lives cost the bank $15,000.

Something Big is Happening in Key West Real Estate

If you're one of those would-be buyers who spends too much "work time" sitting in front of your office monitor searching new listings or back-on-the-market listings on the Key West Association of Realtors mls website or scavenger sites like Zillow or Trulia, you may have noticed two separate phenomena.  First, many of the recent higher priced listings have gone under contract within a matter of days after being listed. Second, many of the listings that have seem to have been "one the market forever" have also recently gone under contract. I think we are going through another "I'm gonna get my Key West house before they are all gone" phases. There is a paucity of listings, especially of nice homes in good condition in the best locations. People with money are grabbing up the few places on the market. This is especially true of homes priced in the million dollar price range or higher.

There are a total of 29 houses priced at $800,000 or higher that are classified as contingent or pending closing at a median price of $1,299,900. Just this week our office placed 620 Elizabeth Street (offered at $4,595,000) under contract after just 44 days on the market.  Two blocks down the street 809 Eaton Street (offered at $1,995,000) went under contract in just four days. 1021 Washington Street which has been on the market 1749 days (offered at $2,750,000) went under contract. 1109 Windsor Lane (offered at $2,175,000) went under contract after 2075 days on the market. The new listing at 824 Fleming Street (offered at $2,499,000) went under contract in 36 days of the listing date. Two new developments are selling multiple units in lighting speed - Southermost Cabana Resort Townhomes in the 1000 block of Simonton Street (offered in the $800s and $900s) and Old Town Villas in the 100 block of Simonton St (offered at $1,599,000 and higher).  CLICK HERE to see what is being purchased.

If you have been sitting on the sidelines it might be time to take some action. I don't think prices are going to go down. I'm pretty confident they are going to go up. If you are not able to purchase a property right now, don't fret. There will always be new properties on the market because life events like divorce, job changes, foreclosure, and so on. The thing about buying now versus waiting until the future is you don't know for sure what will be available nor when or at what price. As a buyer you are in control of how you deal with the present. Just keep in mind there a lot of people just like you sitting in front of their computers looking at the same listings ready to pounce. If you snooze, you may lose. It is a good time to buy in Key West.

Bank Owned - 1221 20th St - Key West

Attention Key West bargain hunters, this is your second chance at this Bank Owned house that just went back on the market on August 8th. It went under contract right after it was listed a couple of weeks ago. For whatever reason, the house is now available a second time. I took a quick peek this morning, snapped some pics, and I am here to report that I think this is a good deal. (Not that my opinion means that much.)

1221 20th Street is located on the east end of the island of Key West. It sits on a large lot (6,900 sq ft  (69' x 100') at the corner of Donald Avenue and 20th Street. This is a family area of Key West where most of the homes, like this one, are ranch style homes. This home was built in 1965. The Monroe County Property Appraiser shows this house as having 1,646 sq ft of living space under air. I suspect the living space is actually larger than that as a former carport appears to have been enclosed to create a mother in law apartment and a back porch may have also been enclosed to create the more recent laundry room.

The main house appears to have been recently painted and updated with new carpet in the master bedroom and a second bedroom. The main living area and kitchen have Salitllo tile floors.  The kitchen appears to have been remodeled and updated in the past few years. A nice pantry sits just off the kitchen. The house appeared to me to be in move in condition.

Mother in Law unit

The mother in law apartment has a living area, mini kitchen, bath, and bedroom. That would be a great place for a teenager who wants his or her own space and would add a fourth bedroom and an additional bath to the property as a whole. CLICK HERE to view the Key West Association of Realtors mls datasheet on this Bank Owned house that is offered at $389,900. If I am correct about the mother in law and laundry area not being included in the Appraiser's database, the square footage would probably increase by about 400 sq ft.

I think the really attractive feature of this home is the large backyard and pool area. There is a lot of space, a nice pool in place, and lots of room to create a really wonderful outdoor living area.  A lot has already been done, but it is not perfect-yet.  But it could be. See the photos below and imagine how you could embellish this property and make it your own.

The rear and south side of the property have a lot of potential for a new home owner with a green thumb. The area is ready for some TLC, some creativity, add a few extra bucks to complete the landscaping of this really pretty pool and garden area.  CLICK HERE to view photos I took today of the house and garden area.

If you would like to see this home or any other property for sale it the Key West area please contact me, Gary Thomas, 305-766-2642. I am a buyers agent and a full time Realtor at Preferred Properties Key West. Let me help you find your place in Paradise.

Key West Real Estate 2011 Year End Assessment

Duval Street fifty years ago

A couple of months ago I lamented over the horrible summer we had in Key West real estate sales. I know there are a couple of agents who have perpetual smiles glued to their faces because of all the sales they had. But for the rest of us, the sales this past summer were few and far between. Season started out great, but the year ended much worse than I expected. I decided to see how it ended by comparing recent sales years.

I did a very simple comparison of single family home sales for the Key West sales market (Areas 1 through 5 in our mls and totally excluded all sales in Big Coppitt Key). The comparison was for years 2009, 2010, and 2011. The results are shown below in a very simple graph. There were 250 single family homes sold in 2009 at an average price per sq ft of $341. In 2010 the number of homes decreased to 246, but the price per sq ft rose to $355. In 2011 there were fewer homes sold than in 2010 but again at the higher price per sq ft of $368. Sales volume declined 9.5% during the three years, but the average price per sq ft rose by 9.26%.

Perhaps a look at recent history will help us understand what happened in the world that may have affected real estate sales in the Key West area. You may recall an event in the fall of 2008 just a few weeks before the general election when the US economy nearly collapsed. Much has been written the late months in the Bush administration that almost brought the country into a second great depression. Putting aside who is to blame for what occurred, the fact is that vast segments of our society had their comfort level for future investing shaken. Many decided to take a wait and see approach to buying that Key West getaway until they perceived the time was safe.

The downturn in the real estate market did have a positive outcome. A great number of houses previously priced beyond the reach of many buyers were repriced downward. The lower prices made Key West real estate a better investment for potential second home buyers and also permanent Key West residents.

The fear of the future decline inhibited investment from 2009 through 2011. The economy did not rebound as heartily as it has after past downturns. Unemployment continued to be a drag on the overall psyche. Government inaction, political stalemate, and a lethargic economy caused many would be buyers from buying that lower priced property in Key West even though it was priced cheaper and financing was at an all time low.

If the bad news in Washington wasn't bad enough, the April 2010 BP oil spill in the Gulf of Mexico made things worse - especially in the Gulf states and particularly in Key West. Media reports of oil slicks hitting the Keys had a huge impact on Keys businesses here including real estate sales. I am aware of several contracts written before the spill occurred were cancelled because buyers feared their intended purchase would not be worth the price paid if the waters and beaches of the Keys were contaminated with oil. Many feared that blobs of oil would decimate our islands and our economy.

Tourism did not die, but it did not flourish like it had previously. After the oil leak was successfully capped, tourists returned to the Keys and spent their money. However, tourists first made phone calls to negotiate room rates at hotels and guest houses. Room revenues in 2011 made a strong rebound.

In 2011 the political rhetoric in Washington geared up for another Presidential election. The Do Nothing Congress did nothing. The Democrats blamed the Republicans and the Republicans blamed President Obama for everything wrong with the economy. The unemployment is finally declining. Buyers seeking a second home in Key West are not among the unemployed. However, second home buyers are still influenced by the lagging economy because it depresses the overall urge to buy.

In January 2012 there are less bank owned properties and fewer short sales for sale in Key West than in years past. I think our market area has stabilized or adapted to the economic climate. The unemployment rate for Monroe County is about 4.2%, and it is even less in Key West. Many locals have two or more jobs. We don't have a lot of new construction in Key West, because we don't have lots on which to build new homes. But we do have a lot of renovation occurring again. There are contractors all over Old Town and in the Casa Marina area working again. If you check The Key West Citizen or Craigslist for Key West rentals, you will find very few available. That scarcity of rentals makes what is available more expensive. And I guess that is a good thing if you own rental property in Key West. I'm not sure renters like those economic realities so much.

There has been a flurry of new listings and new sales during the last couple of weeks in December and the first week in January. The buyers are back and they are buying up the few properties on the market. Buyers follow trends. If buyers see houses in Key West selling again, I think we could see a spike in the home sales over the past three years where sales declined. I also anticipate that the price per sq ft on home sales will continue to rise.
Most experienced Key West Realtors know that before the insane Key West real estate price hikes of the mid 2000s that Key West real estate sales appreciated about 10% per year on an year over year basis. The decline changed that. But if you look at the trend from 2009 through 2010 you will see that maybe, just maybe, the old 10% appreciation factor may be back in play. As Martha Stewart would say "It's a good thing!"

That Was The Year That was in Key West Real Estate

The end is here in Key West

I thought it would be fun to recap some of the properties that I wrote about in 2011 to see the price that was paid. I did not sell these properties. A photo of each property appears immediately below the address which appears in a blue address link. Click the address link to the particular blog so you can see what I wrote.

1012 James Street was a delightful small house with a pool and off street parking located across the street from Keys Energy. Asked $625,000 to start and then reduced to $535,000 and sold at $475,000.

233 Southard Street in the President's Walk addition to Truman Annex as hot property from the day it got listed. I think I showed it three times and some other realtor was there each time I showed the place. It was offered at $599,000 and sold at $562,500.

212 Angela Street was another really hot property. I wish there were more houses like this, and I wish I could have got one of my buyers to act quickly enough to buy it. This property was listed for sale on February 6th for $450,000 and went under contract five days later. The sale closed on April15th for $445,000 or 99% of asking price. I had several email and phone conversations with potential buyers who said they would think about it or would wait to look when they finally made it down to Key West on their annual visit. I told them at the time this property would not be available that long.


I called 817 Pearl Street the Love Shack and named it so with the kindest intent. The place is small but ever so cute. It truly was a love nest if ever I saw one. A lucky buyer snapped up this adorable cottage that was offered at $250,000 for just $220,000.

I invited readers to become my neighbor by purchasing 1424 Whalton Street in the Casa Marina area. The property was listed at $1,475,000 and sold for $1,375,000 or 93% of asking price in just 67 days on the market.

I referred to 1107 Fleming Street as an "old house" because the interior spaces reminded me of the compartmentalization apparent in old homes built around the turn of the last century. I know that some present buyers won't even consider a really "old" house because of that factor. This particular place had a rich rich history, partly based on a former owner. The property was initially offered for sale in February 2010 at $1,750,000 and reduced to $1,250,000 and eventually sold in June 2011 for $980,000. This was a really big house and somebody got a great property for a very good price.


I loved 405 William Street the day I first saw it in 1987. I made a lame-brain offer on it and two adjacent properties that were owned by a previous owner. My offer was summarily rejected. A lesson learned on my part. Years later I am the listing agent on the same house which has been wonderfully updated. The asking price was $999,000 when first listed. It is now under contract and awaiting closing in February. The buyers considered a recently built home that looked like a Conch house and then declared they wanted the real thing and not a "fake Rolex knock-off". I have heard similar comments from other buyers looking for a neat old house who won't consider new houses that are built to look like the grand old Conch houses.

623 Grinnell Street oozes charm. I expected the newly remodeled house would go under contract right away and it did. Something happened and it was back on the market. A few months passed. The house was offered at $995,000 and sold at $925,000 or 93% of asking price ($571 per sq ft).


I thought the Bank Owned townhome unit at President's Walk would sell quickly, and it did. I prophetically wrote "He who waits to listen to the paint peel will not get this bargain priced bank owned unit. If you want to buy this place, you need to act sooner rather than later." The unit was fully furnished, had a transient license, and was offered at just $470,900. It sold for $533,333 or 113.25% of the asking price. Smart buyers need to seize the day to seize the bargain. 550 Porter Lane needed some fix-up work and it needed a nasty old tree out back removed. Otherwise, this was a money-maker.

1327 White Street was another Bank Owned property. This time it was a big Conch house with a lots of nice features, a large pool, off street parking, but it was missing kitchen appliances. The house was offered at $995,500 and sold for just $925,000 or $383 per sq ft. That was a bank robbery.

405 Olivia Street sits across the street from the Ernest Hemingway House. It was Bank Owned and was initially offered at $450,000 then reduced to $410,000. It sold at $381,000 or $276 per sq ft. It had a good sized lot but it needed a lot of work on the inside. I showed it several times and each time I did I gained an appreciation for the amount of work and money I thought it would take to fix the ills of this old place.

1505 Pine Street was one of several The Meadows of Key West homes which were listed by Preferred Properties. A lock bank foreclosed on all of the unsold homes. The homes were originally built to be sold at $1,695,000 to $1,995,000. All became Bank Owned. 1505 Pine Street was offered and sold at $825,000 or $505 per sq ft. These units were terrific buys. I think the buyers that bought here made very smart purchases.

I often write about homes in the Casa Marina area. The house at 1203 Von Phister had some of that special Key West magic that makes certain houses so damned interesting. This house was offered at $1,695,000 and sold for $1,550,000.

901 Thomas Street was one of three homes located in a small Key West compound offered for sale during the past year. The houses share a common pool and a small rear courtyard area. Otherwise, the houses are owned in fee simple. The house itself was adorable and had a successful history as a legal vacation rental. It was offered at $499,000 and sold at $450,000.

1001 United Street is a newer Key West house that needed a bit of updating. It was offered at $537,000 and sold for $500,007 or $316 per sq ft. The house was huge and a little different than what most buyers expect. The buyer got a good deal in my opinion.

One of my favorite houses to sell this past year was the former Bank Owned bungalow at 830 Simonton Street. A couple of Key Westers bought the place from a local bank. They did some necessary repairs, dolled the place up, and sold it for a profit. The sellers' asking price was $749,000. The property sold at $675,000 or $561 per sq ft for a lovely home. Great deal in my opinion.

The short sale at 735 Poorhouse Lane created a flurry of interest. The house was cute and had lots of potential. It needed some work but the asking price was certainly affordable: $469,000. The place sold at $415,000 or $409 per sq ft.

1114 Varela Street was another short sale, except it had something special that is not available in most homes: a transient rental license. This place was really cute and was initially offered at $700,000 and then reduced to $575,000. It sold at 550,000.

Another Bank Owned house at 912 Windsor Lane garnered lots of attention. The place was a royal mess. Still, I thought it was a terrific property for a buyer that wanted a fixer in a great location with lots of upside potential. The house was offered at $299,900 and sold for $310,000 or $238 per sq ft. Remember, this place needs major work!

911 Grinnell Street was yet another Bank Owned houses that was offered for sale at a terrific price: $399,900. I submitted an offer for a buyer. He did not get the property. He offered more for the same house a year earlier when it was a short sale. It sold for $450,100 0r 112.55% over the asking price or $347 per sq ft. The house has some locational issues but it is a great buy for a nice house with a pool in Old Town.

1006 Southard Street is a nice two bedroom two bath home located with a great location. Unfortunately, it sits behind another house, it has no parking, and it needed some work. It was on and off the market for several years and listed at varying prices - the top being $909,000 in 2007. After a succession of agents, it was listed at $575,000 and reduced to $499,000 and sold at $475,000.

319 Grinnell Street was another Bank Owned houses with lots of woes. I don't quite understand why so many would-be buyers think that bank owned is equivalent to 'good deal'. I used to manage bank owned real estate sales years ago. There is normally a good reason why properties become bank owned: either the property has something wrong with it or the owner has something wrong with his or her head and can't get a damned deal completed. Some owners are so pig-headed that they lose property that they think is so special. If it is ruining one's life it ain't special. It is a burden. The house at 319 Grinnell Street had lots of 'issues' that the City of Key West Code Enforcement should be aware of. The house was listed at $299,500 and sold at $308.059 or $326 per sq ft for a major fixer. The house and location have a lot of upside.


1025 Elgin Lane was such a good deal. It sold in a flash. It was a Bank Owned 'condo' offered at $249,900 and sold at $262,000 or about 105% of asking price. I had several potential buyers call on this. They wanted to offer less than the asking price to make the deal sweeter. I explained that the property was a condo by legal definition because of some shared common areas but the other condo was a similar single family home that was converted into a condominium to share the common outside area. I managed to get one buyer to finally offer full price. It was like pulling teeth. He did not get this great deal. Deals like this often have multiple offers and it is usually the buyer who offers the highest price and who has the least contingencies that gets a deal like this.


731 Waddell Avenue created quite a stir. The owner purchased it a year earlier as a short sale for $900,000 in October 2010. He got a wonderful new house at a bargain basis price. Opportunities became available away from Key West, and the owner put the house on the market in October 2011 for $1,425,000 and sold it in 21 days for $1,200,000. That is a $300,000 in exactly one year of ownership.


The little Bank Owned cottage at 626 Samaritan Lane was another big hit as far as interest goes. It was offered for sale at just $119,00. There were more than 10 full price or higher cash offers. The property sold for $165,000 or $308 per sq ft or 136% of asking price. The place had no kitchen, no bath, nor any finished interior space. It is located behind the Bourbon Street Pub which means I hope the new owner has ear plugs.

I wrote about 507 Amelia Street a couple of times over the past two years. I think it was initially way over priced when listed for $1,025,000 in 2008. The house had an extra large and sunny lot, off street parking for two cars, and excellent location just off Duval Street, and it was zoned to accept a value transient rental license. Smart buyers pounced when it was repriced at just $479,000 in July 2011. It sold for only $401,000.


Last month I wrote about six new condo listings at 616 Caroline Street. A smart one bedroom offered at $425,000 just closed at $415,000. Two other units are under contract. Three more are left. This, in my opinion, is the best buy in Key West right now for the buyer that wants a turn key place that can be rented occassionally to make a few bucks to help defray ownership costs. It beats the competition big time.

In the past couple of weeks I wrote about 811 Carey Lane, 920 Cornish Lane, and 1025 Thompson Lane. All three are now under contract.

People are buying houses again. And not just short sales or bank owned properties. Local banks have money to lend. Interest rates are still at historic lows. There is not a lot of inventory of houses for sale. If you see a place you really want to own, don't make a lame-brain offer that has no chance of being accepted. Make as clean an offer with the least number of contingencies to make your offer more acceptable to a seller.

If you are hoping to buy a place in Key West please consider working with me, Gary Thomas, 305-766-2642 or by email at kw1101v@aol.com. I am a buyer's agent and a full time Realtor at Preferred Properties Coastal Realty, Inc. in Key West. Let me help you find your place in Paradise.