News You can Use

Fresh off the Press. FLASH. Actually, it isn't even public knowledge yet. But it is now I guess. Last week a realtor at Prudential Knight Keyside Properties let the cat out of the bag when she started telling folks that Ed Knight (the former owner of Knight Realty which he sold in the mid 1990s that became Prudential Knight-Keyside Properties) and Claude Gardner had re-purchased the real estate company back from the current owner. I called a friend at Prudential who confirmed that the deal is going through and that things are going to change--soon. First, there will be local ownership. Second, there will be hands on management by the owner. Third, the present management will not stay. Sounds positive to me.

Ten years ago Knight Realty was the top real estate firm in Key West. It was the place to work. Ownership and management changed hands and things deteriorated--big time. I worked there and witnessed several exits that were not nice. I won't say any more.

The top sales people that left Prudential moved on to other offices including the Real Estate Company of Key West. That company was purchased and renamed a couple of years ago and the new management there had a bad time. Most of the former Prudential Knight agents that had moved there left and formed Truman and Company. The old RECKW building and parking lot is now deserted.

Now for some good news: A week ago I reported the sales up-tick for Key West during the month of November. I have been meaning to give you an update on Contingent Sales--that is contracts that have been signed by both buyer and seller that are proceeding along towards an eventual closing date but that are contingent upon certain conditions occurring. There are 36 such residential contracts pending in Key West as of this morning. CLICK HERE to see the properties that are contingent. They are in all price ranges and locations from Key West up to Shark Key. I deleted all of the developer contracts for condo sales down on the Key West Seaport.

CLICK HERE to checkout all of the real estate listings from Key West to Key Largo. I'd be pleased to schedule a showing of any property between Key West to Sugarloaf and I can even arrange to help you find a good Realtor up yonder. Call me at 305-766-2642.

The Walls Came Tumbling Down

I don't claim to be an "expert" like some people in real estate. If you have read parts of this blog you know that I have admitted to some big screw-ups in the Key West real estate market--most of which dealt with opportunities I lost in buying property that I wanted. The bad thing about lost opportunities in real estate is that you get to drive by and see what someone else got that you missed. And it can gnaw on you for years.

Today I am talking about two properties that I did buy and what I learned from them. This will be continued through a few more updates as time progresses. I bought a large late 1940's home in the Casa Marina area in late 1995. My Realtor was the owner-broker of a very prominent real estate company. He sold a commercial property that I owned and made a huge commission on the deal. So I relied on his judgment and integrity in helping me find a new home. Bad decision on my part. I ended up suing him, his partner, his company, and the seller over allegations of fraud and misrepresentation. I settled the lawsuit after five years of litigation. And I cannot discuss the terms of the settlement or infer any outcome.

The house I bought had flooded in 1994 and the seller allegedly misrepresented in writing that the house had not flooded and had no settling or foundation problems. Since I paid cash for the property and needed a quick close, I was not required to have an inspection or appraisal. Bad idea folks because an inspection would have revealed the previous flooding and the lingering problems associated with it. It would have also disclosed that the site is prone to flood during any large rain event--not just a hurricane.

GO HERE to read my previous blog on the home inspection and the requirement of a seller to disclose material defects.

In 1998 I got the opportunity to buy the adjacent two story duplex for the price of a song. I bought it instantly because I feel any time you have the opportunity to control your property you should do so. The property was run down and looked even worse. So my initial idea was to buy it and fix it up and collect rent on two units. I did have it inspected and appraised. It appraised for more than the purchase price. I started to renovate the property and decided to stop because the cost of repair was greater than the value I expected to receive. So it sat vacant for 8 years.

A couple of months ago I decided to take down the house. The house is located in a part of the Casa Marina area that is included in HARC so I had to get HARC approval before I could get the house raised. The house was not a contributing structure (a building on a historic map noted for its construction or some other significance). So I got permission to tear it down. The approval process was actually not all that difficult and getting the demolition permit from the building department was not that difficult either.

Last Thursday this big ass monster machine arrived at the property around 10:00 AM and starteg to munch away on the house. Within four hours most of the building had been demolished. The crew returned the next day and took down the rest of the building and a series of trucks hauled the debris away. The lot is now barren and now I get to figure out what to do with it.

The owners of the house next door to the east are renovating that property. They have their house listed at $3.8 million and are happy as hell to have my eyesore gone. In fact I think all of my neighbors will probably nominate me for some award for getting rid of the ugly thing.

I am not going to build anything on the lot but rather plan to landscape it. The total lot size for my house and the vacant lot is just under 9,000 square feet. That is huge for Key West. My property taxes will go down because I won't be taxed for an unproductive building. And I anticipate that the value to my residence will appreciate significantly because of the value of the extra large lot in an area of more estate type properties. Time will tell if I am right.

Later I will talk about what I am going to do with my residence located next door.

I think there are some real buying opportunities in Key West. We are in the worst selling time of the year and some sellers have to sell. So if you are thinking of buying CLICK HERE to preview all current mls listings in Key West. Then give me a call at 305-766-2642. Thanks.

Sweet William Transformation

Why Does Real Estate Cost So Much in Key West?

I was doing my morning internet surfing today and ran across this picture (bottom right) on flickr.com . The caption read: "This house is for sale by the famed Christie's Group. This 'Preferred Property' is about to fall down, which I found marvelous." That got me to thinking about discussing why housing in Key West costs so much and why the current downward turn benefits would-be buyers.
The house pictured was listed in July 2006 at $799,000. It is 1638 square feet on a 1959 square foot lot. There is off-street parking. And it was priced at appraised value at the time. The price has been dropped to $599,000. The good thing about this house is that it is in a good relatively good location in Old Town, but not the best. It obviously needs lots of work, but it does have the street appeal that makes it desirable.

The top four photos show a house in the 500 block of William Street as it looked a year ago and as it looks today. The restoration is almost complete. The tax records show that the existing house was 2827 square feet under roof. It looks like the square footage has been increased as the property was restored as well.

The property was sold a year ago for $1,225,000 and sold in January 2007 for $3,495,000 CASH.

The process of restoring a home in Old Town Key West is similar to any other town with an architectural review committee. The Historic Architectural Review Committee (HARC) controls that process in Key West. The City has a designated official that ensures that the city code is enforced with respect to all homes in the Historic District that are subject to the code.

HARC reviews all planned renovations, restorations, and even new construction in the Historic District to ensure that the historic character of the Old Town area is not diminished by new construction. It has strict guidelines that it jealously protects.

Old buildings such as the one pictured and chided as a "Preferred Property" cannot be torn down and rebuilt. Instead, buildings like this must be conserved and restored. Costs of such conservation and restoration often exceed the costs of normal new construction. The end result is that the cost of acquisition, planning, reconstruction, landscaping, etc. all add to the cost of the final home. But then the final home is often a work of art.

There are some great buys in Key West because of the market downturn. Prices will not stay at there current low rates and those people who buy now ought to reap great rewards in the future.