Bottom Feeders -- The New Key West Big Fish

There's a bit of a debate going on right now in Key West about how well or how poorly the real estate market is doing. Just to set the record straight, I'm not a cheerleader for the Key West Association of Realtors or the Chamber of Commerce. I don't have any axes to grind. I'm not trying to stir up any trouble. I write this blog to get new clients to sell real estate to. Some of my best friends are Realtors. No, I take that last remark back cause it isn't true. But the other stuff is.

Every month I try to compare that month's sales results to prior years so that we can see how we are doing now as opposed to the recent past. I used the mls database and input the search criteria and then change only the year being searched. My search is of Key West to Big Coppitt Key (our suburb).

May 2008 saw 14 single family home sales totaling $9,802,000. The least expensive home sold for $335,000 and the highest priced house sold for $1,925,000. The median priced home sold at $539,250. In 2007 there were 29 single family home sales totaling $27,855,250. The median priced home sold at $760,000. In 2006 we had 31 single family home sales totaling $37,871,000, and the median home sold then at $800,000. But it was 2005 that saw single family homes sales with a whopping $48,899,600 in total sales volume. In 2005 the median home sold for $970,000. If I did my math correctly that is a difference on the downside of 45%.

There were 8 condo and town home sales in May 2008 totaling $3,660,000. The median unit sold for $397,500. Back in May 2005 there were 28 sales totaling $20,247,000 with the median unit priced at $691,250. I think that is about a 42.5% downward adjustment. Downward adjustment is a euphamism for loss.

One of the good omens from May 2008 was the sale of 324 William which has been on the market for a long time. In 2007 it was offered at $2,349,000 or $1,092 per sq. ft. In 2008 it was listed at $1,985,000 and was on the market 135 days. It sold for $1,925,000 or $895 per sq.ft. That price is way on the high side for Key West home sales both in price and price per sq. ft. But I say it is a good omen because it tells me that nicely renovated homes in good locations have not lost their allure and maybe their value has not diminished as much as some would have us believe (or hope).

The Key West landmark home at 313 William Street priced at $4,275,000 or $1,497 per sq.ft. went under contract on May 27th. That is not a short sale property so it looks like some big bucks are being spent on another quality property. As Martha Stewart says "This is a good thing!"

In May 2008 there were 34 residential single family, condo, and town homes that were classified as contingent, contingent/kick out, or pending. Of those, 14 were either short sale offerings or bank owned properties. (The number may be greater because some agents do not list the offerings as "short sale" even though the seller clearly owes more than the asking price and there is no perceived equity.) The median price on the combined residential contracts is $438,500.

Most of the people I work with want the same thing: a nice house in Old Town with a pool at a cheap price. A few want a really nice larger Old Town home with a pool and off street parking at a cheap price. Everybody wants a cheap price, it seems. We call them bottom feeders. I say that in a nice way. They know they want to take advantage of the hard market we are in. I talk to other Realtors and we all agree on the same thing: the offers that are getting made are usually low ball offers. Most offers that we are making in our office are all cash. And I hear that is pretty much true for most other Realtors.

There are plenty of would-be buyers. They just don't want to get the very best deal they can get. Why pay retail if your brother-in-law can get it four you wholesale?
The flaw with bottom feeding is that all properties are not the same. Second, bottom feeders think that if you wait long enough you will get the property at its very lowest price. Wrong.

There is only one 313 William Street (mentioned above). And now some new buyer is going to get to own it. That means everybody else cannot own it. Even those who have the money cannot own it. Because it is one of a kind. Some people tell me they are looking at buying in other South Florida locations because the prices there are more reasonable. Probably true. But then Miami Beach is not the same as Key West. Nor is Naples, or Ft. Myers, or Delray Beach. You have to own a car and want to take your life in your hands to go grocery shopping in some of those places. They even have home invasions. Most of our crimes involve drunks driving, drunks loitering, or drunks involved in a domestic dispute. I personally (seriously) go through culture shock when I leave Key West. Sgt. Phil Esterhaus used to admonish the cops on Hill Street Blues "Hey, let's be careful out there" doesn't even apply to life in Key West. Except to watchout for drunk drivers.

Last week I discovered that the Key West mls is not the only source of real estate being offered for sale by Realtors. Some out of town Realtors are listing properties in Key West, but are not members of the Key West Association of Realtors. They legally don't have to be. They are not breaking any rules that I know of. They put up a sign and install a lockbox. You may find such a listing by walking by it or maybe find it on the internet. It's akin to "for sale by owner" only on steroids because there are several of these animals around. The problem is that out of town Realtors probably don't know squat about their Key West listing. They may have had a service company install the sign and lock box. They may have never seen the property and conceivably know nothing about Key West or the property other than the tax data. Some Yahoo in Tampa could be selling a house down here. Talk about buyer beware.

A side issue of out of town Realtors listing properties here but not through the Key West mls is that the number of properties being offered may be skewed downward because they are not reflected in the mls database. When one of these properties does sell, the sales info will go though the public record, but it will not show up in our mls records. I see this as being very troublesome.

If you are not totally frightened out of your minds by now and still think you want to maybe buy a house in Key West, please consider calling me, Gary Thomas, 305-766-2642 or contact me via e-mail at kw1101v@aol.com. You can search the Key West Association of Realtor's mls website in real time and see everything we know about that is listed with us. As opposed to the Yahoos sitting in an office who knows where. CLICK HERE to do your own search. Then call me. I promise not to call you a bottom feeder.

Compound Investment -- Key West

Price Reduced $800,000 today. Was $1,995,000. Now asking $1,195,000. This is what you get at 610 Petronia Street in Old Town Key West: Four individual cottages fully equipped. Total of 4 bedrooms and 4 baths with total square footage under air of 3468 sq. ft. that sits on a very large 8400 sq. ft. lot. The compound is priced at $345 per sq. ft. That is a very good price for a property like this. 610 Petronia is located just east of the Merlinn Inn Guest House and down a private lane. So the compound is one of those special island within the island properties that I so love.

This is not a foreclosure or short sale. So we don't have to go through brain damage waiting for bank approval. CLICK HERE for more info and photos.

Easy to show. Call me, Gary Thomas, 305-766-2642 to schedule a showing. This property probably won't last long at this new price.

Key West Writer's Compound Cottages For Sale -- Historic Property

Just Listed: two individual properties classified as "condos" that are actually stand alone cottages in the Windsor Lane Compound which was established in 1976. The assortment of restored shacks, shanties, and cottages, were once winter homes for writers such as Pulitzer Prize–winning poet Richard Wilbur, poet, lecturer and "Divine Comedy" translator John Ciardi, John Hersey author of "A Bell for Adano" and "Hiroshima", and Ralph Ellison, john ciardi, who wrote "The Invisible Man."
The compound is located on Windsor Lane near the top of Solares Hill, the highest point in Key West.

719 Windsor Lane is the cottage where the John Hersey and his wife lived until his death in Key West in 1993. The property has generous rooms for the Historic District. The unit has two bedrooms and one bath in a space of 930 sq ft. The cottage sits on its own 3451 sq ft lot inside the compound. There is a right-sized private garden as well. The cottages share a lovely pool and mature gardens, all of which are located in an X zone! Each unit is owned fee simple but shares the common areas. This a 55 and over community and offers the right to quiet enjoyment in terms rarely found in downtown Old Town Key West. CLICK HERE for more detailed information and photos.

717 Windsor Lane is a separate cottage of 504 sq ft that sits on a 2121 sq ft lot. The property is marked by its simplicity. Perhaps that simplicity is what inspired the poets and writers that populated the compound. CLICK HERE for more info on this particular property.

Don't expect granite or marble counter tops or stainless steel designer kitchens or vessel sinks. Both cottages are classic Key West. And that ain't bad.

If you would like to checkout either property please call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com. You might even be a poet and not know it. Perhaps the proximity to the greatness of the former owners will rub off on you.

Bank Owned REO in Key West

REO stands for real estate owned by banks acquired through foreclosure or debt forgiveness. Some banks refer to it as OREO standing for other real estate owned (as in not in the operation of the banking enterprise such as bank building, service center, satellite operation, etc.).

I just completed a manual search of our mls records for bank owned single family homes in Key West. I think that the list may not be complete because some lenders may not necessarily be taking title to new REO in the bank's name. The list does not contain condos or town homes or any other real property. The properties are listed below by street address. Prospective buyers should consider buying one of these properties because they are likely priced at the real current market value and not at some inflated wishful thinking price. When banks foreclose they are required to substantiate the value they put on a foreclosed asset, and that is usually accomplished by having a recent appraisal.

The question arises if the bank owner has the property listed at appraised value, will the bank negotiate on price. The answer is yes. And no. Banks generally will not counter a written offer with a statement of what the bank will accept. Rather, they will tell the buyer to come back with his best and final offer. If there are more than two offers on the same property, the bank will play the offers against each other trying to up the purchase price. The bank may stonewall waiting for better offers rather than accepting a low-ball offer.

Banks must sell the REO. They asset managers look at real deals that can be closed. I advise clients to offer clean deals with very few contingencies (inspection, survey, and title). I urge buyers to offer all cash and make a quick close. The cleaner the offer, the more likely it may get accepted.

Here's the list. Take a look. If you see something you like please call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com. CLICK the street address below for detailed info and photos.

304 Julia Street with pool.

1116 Eaton Old Town with pool.

408 Grinnell Street - a beautiful new home in Old Town.

Windsor Lane rehab

1310 Olivia Street in the Meadows with pool.

1730 Johnson Street mid town with "pool".

2005 Fogarty mid town.

1609 Josephine Street mid town partially re-done.
1713 Johnson Street -- midtown

910 United Street -- Needs redone, huge lot.

309 Julia -- not a typo, across street from the huge house up above.

518 William Street -- Heart of Old Town and a Great Block!

1419 Atlantic Blvd - a condo that really needs some luvin!

34 Kingfisher Lane -- Key West Golf Club --Bank financing available.

1 Coral Way Stock Island - new town home with pool


3711 Duck Avenue

The properties below are not listed in our mls but they are bank owned and available for purchase. Contact Gary Thomas for more info:

Flagler Aveune 3/3, $514,900

Elizabeth Street 5/2 apartments $$548,900

Duck Avenue 4/2 townhome $287,900

Eagle Avenue 2/1.5 $177,900

Bay Drive Saddlebunch Key on water 2/2 $698,900

Who Do You Trust?

Buying a house or a second home is usually the biggest (or second biggest) purchase that most people make in their lives. Some people act out of impulse and make emotional decisions. Others are fanatical in their investigation of the property and the calculus of the deal.

I have become very close friends with a couple that I sold an Old Town home to a few years ago. One is a professional in a very high paying position in New York City. When they are in Key West we talk about their second biggest investment and the Key West real estate market. They trust me. I am glad for that. But they have become friends with other locals who also give them real estate advice such as a waitress at an italian restaurant and a barfly they met at the Schooner Wharf. I kid you not.

It amazes me but my friends are not dissimilar to others who look at buying a place in Key West. They often seek out the advice of "locals" they meet socially as if the Realtor they are working with is not worthy of belief. (There are a few I'd have to agree on myself.) Or maybe they are just seeking a second opinion as in "should I have the operation or not?" kind of opinion.

Let me throw this out at you for grins. Checkout the Realtor you are working with. See if he or she has had any run-ins with the law by going here: Has my Realtor been arrested? Or you can see if he or she has been evicted or sued for past debts by CLICKING HERE.

I'm not trying to disparage the local real estate community. There are some good people. And there are some drunks and druggies. Who do you trust to help you in making the biggest purchase in your life?

You can also checkout all of the current Key West and Lower Florida Keys real estate listings by CLICKING HERE. Just select the type of property you want, the price range you want to pay and start your investigation of Key West real estate. If you see something you like, please call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com.

709 Bakers Lane Key West Open House

I am hosting an Open House at 709 Bakers Lane in Old Town Key West on Sunday, May 25th from 11:30 AM until 2:00 PM. I've written about this property several times. It has to be one of the best deals in Key West.

The perfect island getaway beautifully located atop Solares Hill on a quiet lane is this completely renovated walled estate. The main house has Brazilian cherry floors and 16' cathedral ceilings. The new gourmet kitchen has a SubZero refrigerator, Viking wine chiller, Jenn Aire range and microwave ovens, 2 Bosch dishwashers, granite counter tops and cherry/cream glazed cabinets. The family/media room has 2 walls of glass overlooking the 26' black pool w/waterfall and 'cave' spa! There are 5 porches, rooftop sundeck and bricked courtyard with fountain. Joined by a covered walkway is a 2bd/2ba guest house with kitchen & a 1bd/1ba pool house. This magic propety has been reduced from the original asking price of $1,995,000 to $1,400,000 or $609 per sq ft.

This property at 709 Bakers Lane is just two blocks from Duval on Solares Hill--the highest point in Key West. The compound is actually two homes plus a guest cottage that is hidden away just off Elizabeth Street.

Each building was thoughtfully renovated to provide separate living spaces for the owner and family or friends. The great room in the main house features two chandeliers from a historic Chicago theatre. The kitchen has all the bells and whistles one would expect. The second floor is devoted to the master bedroom and bath plus a second floor terrace overlooking the pool below.

The guest house features a living area, kitchen, and two bedrooms and two bathrooms. James Leo Herlihy wrote Midnight Cowboy in this house.The home is not for everyone because the main house has only the master suite for sleeping. But an individual or couple with no small children might find the guest house and pool house just the ticket.There are two ROGO units on this property meaning that the owner could legally rent one or both homes as vacation rentals. (Lots of rules--not discussed here.)

CLICK HERE for more info and photos. Remember to come see the best buy in Old Town on Sunday, or call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com.

408 Grinnell St. Old Town Half-Price Sale

Everybody wants a deal. This is a really Big Deal. 408 Grinnell Street is brand new construction -not a renovation! The 3 bed/4 bath home is a GE Smart Home with all the extras -9 and 10 foot ceilings - coffered & cathedral, reclaimed heart pine floors and walls, 10'' baseboards with corner bullets and crown molding, Andersen impact-resistant windows & doors, professional landscaping, custom pool, off-street parking, Chicago brick drive and pathways. The kitchen will delight with custom cabinets, granite, top-of-the-line appliances including built-in plate warmer. All four baths are luxury stone tile with high-end fixtures. Unlike older homes, this home has spacious rooms and walk-in closets. This is a tremendous opportunity to buy a truly finished product in a great Old Town location at about 1/2 of its original price in 2005 when it was completed and offered at $2,750,000. This home is now Bank Owned. It is now offered at $1,461,900 or $590 per sq ft for new quality construction in the heart of Old Town.

CLICK HERE for additional neighborhood pics and pics of the house and pool.

The builder did everything right on this house. I showed this house several times and I couldn't find anything not to like. The problem was not the house but the lingering uncertainty about the market made it a difficult sale. The houses on either side are just beautiful. The houses across the street are historic and have not been updated like the next door neighbors. The biggest downside of the property is its proximity to the corner of Eaton and Grinnell. Paradise Cafe is across the street and on the corner for those who can't quite place the location. And there is a house across the street and up two doors that needs to be redone. It will. Someday.

If you are a boater the Historic Key West Seaport is about a five minute walk. No parking issues to deal with. Duval is also about a five minute walk. If you get hungry and need a great sandwich Paradise Cafe is across the street. And if you want a dining experience you only have to walk one block to Azur. Of course Michael's and Mangia Mangia are close by as well.

CLICK HERE for more information and photos of this property. Interested? Please call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com. Don't wait. It will not last long at this price.

Water-Blogged in Key West

I was watching a new episode of HGTV's National Open House last night. The episode featured homes in Minneapolis, Charleston, S.C., and San Francisco, at price points of $250,000, $500,000, $750,000 and $1 million. CLICK HERE for more info on that episode. In the middle of the program there was a gay couple in Minneapolis that bought a home in a deteriorated neighbor hood about ten years ago. As I recall they paid somewhere around $100,000 for their home. They worked their magic on the house and made it absolutely shine. I was just amazed at what they accomplished without spending a helluva lot of money. I think the announced said that in today's market the house is worth $750,000. I may be wrong on the number, but that is not the point. The bought a good house in a somewhat bad neighborhood and turned it into a showcase that is now worth a lot of money.

The camera veered outside to show other houses on the block that were also re-vitalized. House after house had the gay flag flying. All the lawns were mowed and all the facades were crisp and clean. It made me think about what happens when gays move into an area. They play house. They build and re-build and decorate and re-decorate. Just like their heterosexual counterparts, they nest. Sometimes they just build more fancy nests.

When I bought my first house in Denver in the 1970's I decided to find one in the Capital Hill area. That part of town was the area developed after the first generation of miners settled in Denver. A couple blocks from my house you will find the Governor's Mansion and the home of the Unsinkable Molly Brown. But back in the 1970's a lot of the grand homes were split into apartments and many had deteriorated. The wealthy moved on to greener pastures. When that happened, prices went down. My generation of gay men and women did what the unthinkable in earlier times: they bought homes together. In fact the City of Denver had an ordinance which forbid unmarried people from owning homes together in specific areas of Denver. I remember looking a property one time and my Realtor told me "Gary, you know that you cannot buy here." I told her "Oh, yes, I can!" The city eventually abolished that arcane law. Denver's Capitol Hill area is now one of the toniest parts of town.

When prices were low gays moved in and bought the houses nobody else wanted and brought them back to their former glory -- just like the guys in Minneapolis in the National Open House episode last night. That made me think what may happen now that prices are returning to levels where normal people (as is not rich) can buy a permanent home or second home in Key West.

There are some good deals in the Old Town area as compared to prices from a few years ago. Prices are still high as compared to other areas of the U.S. But you cannot find the architecture or lifestyle that is Key West in Minneapolis or San Francisco. If you are gay you can find many gay neighborhoods. But you'll have to deal with other issues like having a real job, commuting, long lines, buying clothes to impress others, things like that.

I think the people that have homes on the market in Key West today really need to sell. So if you are a serious buyer and you want to buy a place in Key West you should spend some time and see if you can find a place that meets your needs. CLICK HERE to checkout single family homes in the Key West area on the water (canal to open water) that are priced between $700,000 to $900,000. You will be surprised what your money can buy today. And, remember, these are asking prices. If you see something you like call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com.

Retraction

On April 22nd I wrote about a bank foreclosure on Whistling Duck at the Key West Golf Club that I called a buying opportunity. READ WHAT I SAID THEN HERE. I showed the property to a client a few days later. I apologized to her for even showing the property. And my reasoning follows below.

We had looked at another listing a few days earlier of a smaller unit that was in good shape but priced comparably. I could see from the photos that the Whistling Duck property used to be very attractive when it was occupied. I reasoned that some tlc would bring back the lustre of yore and that my client could get the property for about half the price the previous owner paid for it. So more square feet and a similar price seemed rational. Wrong.

The specific
Whistling Duck property is termite infested. Many of the windows and some doors are rotted from water and termite (and/or carpenter ant) infestation. (I use that term interchangeably.) That may seem par for a neglected property in Old Town, but the town homes at the Golf Club are only a little more than 12 1/2 years old. Since the property is a town home, the adjoining property owners have to agree to have the units tented as a preventive to termite infestation. It looks like it did not happen on this specific Whistling Duck property. And because there are other properties in foreclosure that I began to wonder how many others are facing a similar fate. The units were constructed of the same materials. The windows and doors at the specific Whistling Duck unit had not been properly maintained.

This past January a real estate broker, who manages several units at the Golf Course, told me that she has had a problem with rats in some units she manages. She mentioned one specific unit that had a rat problem where the tenants had a baby. That is not good.

The Key West Golf Club Homeowners Association approved an application for a $250,000 Line of Credit with BB&T Bank at the March 17, 2008 meeting. According to Karen Hendrick of the Key West Golf Club Homeowners Association the line of credit "is for emergency use only such as a hurricane not to cover unpaid dues".CLICK HERE. The association did make a one-time special assessment of $400 per unit to cover short fall.There are many properties in foreclosure or that are bank owned. (According to Realtrytrack.com on May 22, 2008 there are 13 pre-foreclosures, one set for auction, and 3 bank owned units at the golf course.) The banks are most likely not going to pay the homeowner association assessments immediately. (I used to manage foreclose properties for banks in Colorado. We only paid what we legally had to pay. No money was paid gratuitously.) That means someone else is going to have to do it. Guess who!

A lot of other condo or homeowner associations are facing similar hard times in Key West and across the country. There is a reason prospective buyers are given a copy of the association rules and access to the minutes and financial records: to determine if there are any legal or other issues that could end up causing a new homeowner to have to pay more money in the future to correct some shoddy construction, latent defects, disclosed problems that have not been repaired, undisclosed problems, or to pay the shortfall of unpaid condo assessments. It is a growing problem and buyers need to be aware of it.

I know of a four unit property in Old Town where two of the units are in foreclosure. The association is supposed to provide building insurance including windstorm. The defaulting owners stopped paying homeowners monthly fees months ago. There are no reserves to purchase the required insurance. The foreclosing banks are not going to ante up. The two surviving owners can't pay the fees on their own. What do you think is going to happen?

My concern goes way beyond the Golf Club because it is only symptomatic of what is going on at other homeowner associations both big and small.I found a very well written blog regarding this mess CLICK HERE. He cites statistics to what I said. And the statistics are scarry. "More than 60% of the nearly 500 survey respondents said that banks and
mortgage lenders now holding title to the foreclosed units or homes are not
meeting their legal obligation to pay regular fees or other assessments to
the association. More than 40% reported mortgage-foreclosed units or homes
in their communities have been vacant for more than six months, with one in
five citing vacancies of more than one year. Respondents expressed concern
about maintenance and security issues related to vacant units as the 2008
tropical storm season approaches."


Banks are notorious about nickle and dimming customers over the smallest service issues. But banks are equally notorious about pinching pennies and refusing to pay costs to maintain foreclosed properties. I'm not talking about any one bank, I'm including almost everyone in my indictment. Banks expect Realtors to pay to have electric service turned on and maintained and to have pools maintained and other services to protect the bank's assets. The banks agree to reimburse the Realtor-listing agent when the property sells. If a Realtor has 30 bank foreclosure properties for sale in Key West, imagine how much money it would take to maintain the bank's assets each month.

Again I apologize to my client that actually looked at the specific Whistling Duck unit and to anyone who read my blog and thought about looking at it. If you are looking at purchasing a condo or town home anywhere in Key West, you might want to have your attorney or accountant review the condo docs and financial statements to make sure that you are not buying into a huge mess.

917 United Street Key West, Florida

The neat house at 917 United Street in Key West is now offered as a Potential Short Sale. A Short Sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured by the property upon receipt of less money than is actually owed. That's the hope anyway.

917 United Street is a 3 bedroom 2 bath home that has been very nicely remodeled. The house is 1678 sq ft and sits on a 6233 sq ft corner lot. This property makes extremely good use of the space and has excellent storage areas in the carport, garage and shed. It has been renovated and remodeled throughout to a high standard and has a beautiful new kitchen and bathrooms and gorgeous new tile floors in every room. There is a great outdoor area with large pool. CLICK HERE for more info and additional photos.

There are two other houses on the same side of United Street in this block. The first property at 927 United (CLICK HERE TO SEE)was just remodeled and it is as cute as all get out. And the property at 929 United is brand spanking new. CLICK HERE to seek 929 United. Good neighbors to have, especially when market values rise again.

Want to see 917 United Street and see if it works for you? Then call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com. Many short sale properties are going under contract at prices way below the asking price. So don't let the price of this property deter you from looking.