April 2008 Real Estate Sales Report for Key West

There were 23 single family homes that sold in April 2008 for a total of $16,442,000. The one an only short sale was at 1119 Oliva Street that I reported earlier this week. But there were three bank foreclosures that sold. All three sold for about one half of the original mortgage amount. Interesting!

Eleven condos and town homes sold during the same time period with sales totaling $7,612,900. Two of those were bank foreclosures, and both were at 1800 Atlantic Condominiums. The same bank that foreclosed on one unit financed the repurchase by a new buyer. (It was my customer and he got a great deal.)

There are a total of 59 homes, condos and town homes currently listed as contingent or pending. That means there are binding contracts between seller and buyer that may either have some condition that needs to be satisfied or that is just waiting to close. Interestingly, 46 of the properties are listed as contingent/continue to show or contingent/kick out. The Key West Association of Realtors requires that property listings be changed from "active" to "contingent" once a short sale contract has been accepted by the seller and is pending approval by a lender. It looks to me like a significant number of the contingent sales are short sales awaiting lender approval.

Our mls system does not automatically sort short sale or bank foreclosure listings. So it is necessary for a Realtor to make a search of all listings for language that denotes short sale or bank foreclosure. And some Realtors are entering erroneous information into the mls database. So our database is not exactly 100% correct. We did a manual search of the 1154 active residential listings and of those about 250 are listed as short sales. That is scary.

There are way too many properties on the market right now. Many of the pre-foreclosure properties are condos or town homes and are being listed as short sales. Many of those properties were purchased in the past three or four years and most of those were purchased with little or no money down. That means the "owner" has no money invested and no commitment to the property. Many of those same properties have declined in value and are not worth what they owe. It is no wonder that owners are walking away. That exodus is driving down the value of other similar units. Home owners who purchased their properties years earlier are unaffected by the price decline as long as their basis is at par with the current market value. They just missed the opportunity to gain from the huge price increases that occurred prior to the bubble burst.

I think we will see continued downward movement on prices overall until the remaining homes condos - town homes are foreclosed upon. I know there are many more properties that will be foreclosed upon and I anticipate more downward pressure on prices as a result.

The banks are keenly aware of what is transpiring. They are playing a numbers game. They do not have an emotional tie to their real estate assets. Their only commitment to Key West is that they either own or will potentially own a foreclosed home or condo. The goal of the banks is to recover as much on the sale of their assets as quickly as possible. That is is. A good Realtor can help a buyer find a short sale or bank foreclosure and turn a bad deal into a good deal. Not all short sale properties are good deals. And certainly not all foreclosures are good deals. Low price does not equate in any way to some piece of real estate being a "deal".

I still think that there are some very good buying opportunities in Key West, especially in the Old Town area, Casa Marina, and Meadows areas. The topsy-turvy market is driving down the asking prices of properties that are not under distress. And that creates opportunities for prospective buyers. If you are interested in buying a home or condo in Key West please consider calling me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com.

Casa Marina Short Sales

Last week I cautioned that Short Sales may not be all they are cracked-up to be. So today I am touting two Casa Marina Short Sales just to tease you. But who knows, you may be in the 18% of buyers lucky enough to actually close a short sale. Read on and you may be enticed to give it a try.

1712 Laird Street is a wonderful renovation of a concrete block house with high open ceilings, open floor plan and French doors that lead to a large deck and beautifully landscaped gardens. There are 2 bedrooms, 2 beautiful baths with a study that can be used as a third bedroom. Shell stone floors through out, walk-in closets and plentiful storage, central air, stainless steel appliances, beautiful hardwood counter tops and a good sized laundry room. Handsome privacy fencing, off street parking and plenty of room for a pool. The asking price has been reduced to $629,000 or $419 per sq ft. I suspect the sales price will be lower indeed.

CLICK HERE for more info and photos of 1712 Laird Street.

I have written before at 1116 Seminary. The asking price is $1,000,000 but I suspect the seller will accommodate any reasonable offer. The seller has no equity to preserve. Renovated three bedroom two bath home in Casa Marina area close to beaches and Old Town. Amenities include bamboo wood floors, cherry cabinets, granite counter tops, tumbled marble baths, heated pool and off-street parking. CLICK HERE for more info and photos.

A short sale generally occurs when the Seller's net sale proceeds after payment of customary closing costs from the sale of real property are insufficient to pay outstanding mortgage and /or other lien(s) in full at closing. Typically, a short sale seller is in default of loan or lien obligations and is able to document the financial inability to meet ongoing repayment obligations. A short sale is not a sale that occurs quickly. Short sales take a lot of time because the third party lender must go through a series of exercises to determine whether the price is reasonable and whether the borrower is financially unable to repay the mortgage. But for those aspiring buyers willing to spend the time and effort to go through the process the reward can be fruitful.

Want to see either of these homes? Please call me, Gary Thomas, 305-766-2642.

A Short Sale that Worked

I made several entries in my blog suggesting would-be buyers to consider purchasing 1119 Olivia Street in Old Town Key West. The legal two story duplex had been throughly remodeled within the past couple of years and had evolved into short sale opportunity. The original asking price was $1,275,000 in March 2007, but finally ended up at a paltry $570,000. The property sold yesterday at $550,000. CLICK HERE to see what you could have purchased in Old Town if only you had heeded my suggestion. I did show the property to several prospects that were looking for a bargain. The same seller (who is also Realtor but not a personal friend or colleague) has other short sale properties on the market.

I just did an mls search of Active Single Family Homes in the Old Town, Meadows, and Casa Marina Areas priced under $1.8 million. CLICK HERE to see the homes that I think are either bargains or good buys. A couple are short sales, a couple are bank owned, and a few are owned by sellers who just want or need to sell. A few of the latter may seem priced high on a per sq ft basis, but I suggest that an active buyer look at what the properties have to offer in evaluating the asking price.

CLICK HERE to perform your own search of the Key West mls. If you see something that interests you please call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com to schedule a showing.

8 Passover Lane Old Town Key West, Fl

I have often written about the virtues of living life on one of the slow lanes of Key West. Well, 8 Passover Lane is about the slowest of the slow lanes as possible. It is so slow that it is really just walkway about 6' wide that provides access to the three cottages on the lane. I can see some readers thinking I must be nuts. But read on.

This is how the listing Realtor describes the home: "Absolutely perfect story book cottage in one of the most desirable locations in Old Town. Step onto the rocking chair front porch and open the front door to the main level open floor plan with a large living/dining room and beautiful kitchen with custom cabinetry, granite counter tops and stainless steel appliances. Also on the first floor is the master suite w/vaulted ceiling, master bath and French doors to the rear deck,a cozy study/bedroom with built-in day bed and adjoining full bath with French door to private outdoor shower. Upstairs is a large guest bedroom with sitting area and half bath. Outdoors is a nice sized yard with heated small dipping pool and tropical landscaping. Beautiful turnkey property in absolute pristine condition."

Every once in a while a listing Realtor will refer to a new listing as a "quintessential Key West cottage" and that is exactly what this property is: the most perfect embodiment of the Key West cottage. I guess I'd describe it this way: you walk down the little lane and spy the mystical mailbox notifying you that you have arrived at 8 Passover Lane. You look to the front porch where you see the sign that you have indeed arrived "Paradise Found". Then you see the rocker on the front porch inviting you to seat yourself. Then you open the front door and enter into another world. A world far from the madness that has become the daily life up north in America. The place is done to a Tee, but not over-done. You just feel at ease. At home. In fact there is a sweet little sign over one of the doors that says it all Home Sweet Home. There isn't anything cookie cutter about this cottage. Everything, every view, every last detail is unique.

This two story dream house can be yours for $799,000. It is 1120 sq ft and sits on a lot that is 2349 sq ft. So the asking price equates to $713 per sq ft. They didn't make a lot of these cottages. In fact this is the only one. That's why it is so special. So desirable.
CLICK HERE for more detailed information on this charming two story cottage and additional photos. But understand you must see this living doll house to appreciate it. There is not another like it in Key West. Not at this price, anyway. There are some equally charming homes, but they are all priced much, much higher.

Want to see this property? Please call me, Gary Thomas, 305-766-2642, or e-mail me at kw1101v@aol.com. This is the place everybody dreams about. But only one person gets to own it. Maybe that person will be you.

Recognizing a Real Estate Bargain In Key West

I just Googled "recognize a bargain" and up comes this incredible blog written by fellow Realtor Dan Melson from San Diego. CLICK HERE to read the item in full. It is worth your while, especially since I agree with what he says. lol!!!

The premise of his treatise is that his services as a Realtor are valuable because he has years of experience that enable him to help a buyer find a genuine bargain.

Melson says "The ability to recognize a bargain property is a valuable skill. If you disagree with this, what reason do you have for looking at properties before you buy them? Why don't you simply pick out the cheapest property that meets your specifications on MLS, make an offer, come to an agreement, and pay the price, all sight unseen? Remember, you're claiming that the ability to recognize a bargain does not have value. Why would you want to take the time to look if there's no value in it?When there are ten thousand identical items in a warehouse or on the grocery store shelves, you grab one and get on with your life. You might look at the label to make certain it was manufactured to fill the need you have. You don't bother opening the box - if it's defective, you can just exchange it for another. They're all interchangeable."

Then he comes up with a terrific and easily understandable exposition: "But that isn't the case even on everything in the grocery stone. There's a reason they wrap meat in transparent plastic - so you can see the piece of meat you're buying. To view the cut, how much fat is on it, how large a piece of meat it really is, how fresh it is - in short, the value of the meat. If you know what good meat looks like, you've seen people that have no clue as to what to look for choosing crummy meat that you've just rejected. It happens most of the times when I'm at the meat counter, as a matter of fact. It's why the grocery stores keep putting out bad cuts of bad meat. Somebody who doesn't know any better will buy it."

Public access to the Key West Association of Realtors' mls database is open and free to the public. No need to get sign up with a Realtor to get access. Simply CLICK HERE and you can search all real estate listings from Key West to Key Largo. But using the database only gets you a list of properties.

I often add tags like "bargain", "value", or "locational value" to attract readers looking to find great buys. But I agree with Dan Melson that bargain and cheap price are not the one and the same. Tags only attract attention. I try to provide an explanation of why a particular property is a bargain or why one location is better than some other location so that a potential buyer will see the merit of my position and appreciate the value of my experience. I know I have written on several occasions that everybody in Key West is an expert on real estate, because everybody knows what every piece of property costs or sold for, and now who is losing his home in foreclosure. But knowing the price of a piece of property is only the start.

I've written before about one of my best (or worst) learning experiences that occurred almost 30 years ago. I had a bunch of cash and wanted to buy a new (actually old) house on Clermont St. Parkway in Denver. The house looked like something out of a storybook. I made a low bid, all cash offer which went down with a thud. The seller refused to even respond. I went around my Realtor and called the seller up. I offered to pay full price. He said I was an idiot and said he would refuse to sell even at full price. I got the message. And ever since then I have counseled buyers from making the same mistake. If you see something you really like and want to own, make a good faith offer. Low ball offers are fine on run of the mill condos, but if you want to buy something that is really special, treat the seller with respect or you run the risk of losing the ability to buy the property like I did.

There is a lot of junk for sale in the Key West real estate market. A few years ago people were fighting to buy that junk. Now many properties sit vacant--either foreclosed upon or even abandoned knowing they will be foreclosed. There are some good deals to be made on these types of properties. For the most part they are functional. They are not the types of houses that people up in America dream about owning as a second home in Key West. But they can provide good, decent shelter and now at a more affordable price. And there are the occasional properties that come up that are very well located, or have all the bells and whistles, or maybe circumstances require that they be sold quickly and at a huge discount. Both types of properties can be bargains. But it takes experience and knowledge to know the difference between a cheap house that costs too much and an expensive property that is being offered at a very reasonable price.

I encourage would-be buyers to checkout the mls listings CLICK HERE. Get a feel for what is available and what the asking prices are. If you see something that interests you please call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com.

The Fallacy of Short Sales in Key West

A couple of days ago the Key West Association of Realtors held a lunch hour lecture on Short Sales. The attorney for our association conducted the lecture. There were about 110 Key West Realtors in attendance.

There are a significant number of active short sale listings in our market. There are so many short sale offerings that the Florida Association of Realtors and the Florida Bar Association have adopted a Short Sale Addendum that is to be attached to an Exclusive Right of Sale Listing Agreement when a short sale is offered. The form defines a short sale this way: A short sale generally occurs when the Seller's net sale proceeds after payment of customary closing costs from the sale of real property are insufficient to pay outstanding mortgage and /or other lien(s) in full at closing. Typically, a short sale seller is in default of loan or lien obligations and is able to document the financial inability to meet ongoing repayment obligations.

The Association's lawyer cited one ominous statistic that only 18% of the contracts between sellers and buyers actually close (lender approves the mortgage release at a discounted payoff). Assuming his statistics are correct that means that 82% of potential short sales do not close.

I have been promoting short sales in Key West as buying opportunities, and I think they still are. But I may have mislead potential buyers into believing that just because a property is offered at an attractive short sale price that some lender will actually approve a discounted payoff. It is not that simple.

I found a very well written blog on this subject and I hope you will read it. Short Sales - A misnomer AND a Marketing Ploy. The blog and the comments point out all of the downsides to a short sale.

I think Short Sales are a marketing tool, not a panacea, especially in Key West. We have a lot of properties on the market right now because many second home owners and investors are walking away from properties, and short sales are one method of marketing those properties.

High Anxiety? -- 701 Elizabeth St. Key West

In my March 1st blog called "Season's Beatings" I said "Most of the sales that have occurred [recently] are a result price reduction. There is still a hesitance by many buyers who think the market will fall further, especially after Season ends. I agree. But bargain hunters may miss getting the plum properties just to save money. Homes in Key West are not like fungible goods. They are unique. So the smart buyers are buying location and value at a good price. Some people may make good money buying what is leftover at the end of the day." I then said to expect more price reductions because sellers who need to sell now must expect the worst. "When the buyers leave, the party is over till next year."

So Season is done and gone. My prediction about more price reductions is exactly what has happened. Today the asking price on a great property in a great location was just reduced from $1,295,000 to $1,100,000 or $555 per sq ft. That is a very competitive price for being located in the heart of Old Town. 701 Elizabeth Street sits at the top of Solares Hill (hence "High Anxiety" as a title--no inference to anything else is intended). The listing Realtor describes the property this way "Perched atop Solares Hill, the high point on the island, this duplex includes a 2 bedroom 2 bath owner's unit with private heated pool and outdoor shower and a 1 bedroom 1 bath separate apartment that is currently rented for $1300 per month. Designed by Tom Pope and built by Erik DeBoer in 1984, the floors are recovered river heart pine and the windows are shuttered with metal louvers. Includes off-street parking." Key Westers know that Erik deBoer built many quality homes during the 1980s (this one happened to be his own residence for a while).

This property is another one of those buying opportunities I have written about: quality property, great location, good price. Think back four years ago when buyers were falling all over themselves looking for deals. Here's a deal people. CLICK HERE for more details on this property and more photos. Then please call me, Gary Thomas, 305-766-2642 or e-mail me at kw1101v@aol.com.

23 Whistling Duck Key West Golf Club - Bank Owned

There are two ways to look at bank foreclosures: (1) dumps that nobody in their right minds would buy or (2) buying opportunities. I think the 3 bedroom 2 bath 1060 sq ft condo at 23 Whistling Duck is located in the Nature Preserve area of the Key West Golf Club Development is a buying opportunity. The property is bank owned so we already know we have a motivated seller. The asking price was just reduced to $364,900 or $344 per sq ft. The property is vacant and easy to show. If potential buyers get pre-qualified through Countrywide Home Loans to purchase this (or another Countrywide owned property) they will receive a free appraisal and credit report if buyer finances through Countywide. I'm not a pitchman for Countrywide. But it is sweetening the deal for would-be buyers.

I'm cheating on this listing because the pics above are of the property when it was listed by the previous owner. He paid $753,000 in July 2005. Fast forward to today and the asking price is around $300,000 lower. The actual sales price will most likely be even lower. CLICK HERE to see more info about the unit and see photos of how it looks today. Don't worry it's not all messed up or trashed. This could be a sweet deal. Other units in the same area are priced much higher. CLICK HERE to see what other similarly sized and located units are priced at in today's market.

If you would like to see this unit up closed and personal please call me,Gary Thomas, 305-766-2642 to schedule a showing. It isn't my listing, but it is my job to help people find good deals.

823 Johnson Lane

It is really unfortunate that it is coming to this. Good people with dreams of making something nice and creating a future for themselves are seeing those dreams being dashed through no fault of their own. The sad fact is that now even homes in the Old Town area have been dragged down into the Short Sale pool along with so many properties in the Mid Town and New Town areas that were over priced when they sold 3 or 5 years ago.

The beautiful home (and it is a home, not a house) at 823 Johnson Lane is located in Old Town Key West. It sits midway between the landmark St. Mary's of the Sea Catholic Church at the corner of Windsor Lane and Truman Avenue and the City of Key West Cemetery one full block to the north. Johnson Lane parallels Truman and runs easterly off Windsor Lane.

The home is a newly constructed two story home. The photos speak for themselves about the quality of thought, design, craftsmanship, cabinetry, tile & marble, quality finishes, and top of the line appliances that went into the construction of this home. The kitchen is not only beautiful but also user friendly. It is a cook's delight! The living room has a working fireplace to take off the chill on the one day a year it gets chilly in Key West. The loggia by the pool is as hip as all get out. Upstairs there are two incredible bedrooms and each has an incredible bath. CLICK HERE for more detailed information on this property and additional photos. Well worth the look even if you are going to buy.

The property was originally listed at $2.6 million and was reduced on April 18 to $1,875,000 or $1,050 per sq ft for this very high end 1785 sq ft home that sits on a 3091 sf ft lot. Very few homes in Key West are worth over $1000 per sq ft. This is one of them. If you would like to schedule an appointment to see this property please call me, Gary Thomas, 305-766-2642. I think this is a real buying opportunity. This is not a short sale.

Key West Real Estate Q & A

I have been getting e-mails and phone calls regarding some pretty basic real estate issues in Key West. So I thought I would start a Q & A thread.

Explain the difference between Transient Rental and Vacation Rental The City of Key West has an ordinance that prohibits homeowners (and condo owners) from renting their homes on a nightly basis unless the house has a transient rental license. Transient rental licenses are limited to specific areas that are zoned for such use, and those areas are specific and very limited by design. There are a limited number of new transient rental licenses that the city can issue. Some transient rental licenses are available for purchase through Realtors, but the transfer of these licenses from one property are restricted. The City of Key West issues a medallion that is to be affixed to the outside of any property to identify it as being a legally licensed transient rental. I encourage any potential purchaser to verify with the city licensing office and private counsel to ensure that a license if purchased may be transferred and used for the purpose intended.

Since the transfer of transient licenses is so tightly regulated you may appreciate the value of such a license. A transient rental license is a license to make money, sometimes lots of it. Tourism is the biggest business in Key West and tourists who flock here need a place to lay down and rest their heads in beds. In recent years several established guest houses and motels were converted into condominiums, so the number of available hotel type rooms decreased.

The City of Key West does permit property owners who have obtained a non-transient occupation license to rent there homes or condos legally once per month for a period of 28 dyas or less. That means a property owner can rent his or her home for one week in January or for the entire month to the same renter. The property owner may not rent the property for one week to one tenant, skip a week, and then rent the same property to someone else for the remainder of the month.

Are there any special rules for transient rentals at 1800 Atlantic? The rules cited above apply to 1800 Atlantic, and it is in an area that is zoned to receive transient rental licenses. But you cannot purchase a license from one place (even within the complex) and transfer it to a unit that has not previously had a transient license. If you purchase a unit at 1800 Atlantic that has a transient license you are not required to rent your property out as a vacation rental. But you should pay the annual license fee to the City of Key West and Monroe County to maintain the license (about $80 total) because that license adds about $50,000 in additional value to your unit at 1800 Atlantic.

By the way there are some good buying opportunities at 1800 Atlantic. CLICK HERE to checkout all of the current condos listed for sale. Some have transient licenses, some are rented as vacation rentals, and some folks actually call 1800 Atlantic home. If you see a unit that interests you and you want more info, e-mail me at kw1101v@aol.com.

April 22nd: CLICK HERE to see a new listing at 1800 Atlantic with a transient rental license. Although this unit is not listed as a short sale, it may in fact become one because the amount the owner owes on the mortgage cannot be satisfied even if the unit sells at full asking price. The unit is on the second floor on the Bertha Street side (east) of the complex and is located 5 units from the Atlantic Ocean so it does have an ocean view. It does have a new kitchen and baths, but the asking price is high in my opinion for this demanding market. But should not deter a serious buyer from looking.

What is HARC? HARC is a board of Key West citizens appointed by the Mayor of Key West to oversee the development plans and execution of same in the historic district of Key West. CLICK HERE to see the official City of Key West Historic Architectural Guidelines. The guidelines provide a simple statement of the types of materials that are generally permissible in the restoration or renovation of historic properties or the construction of new properties in the historic district. If you intend to buy an renovate a property in the Old Town area it is essential that you review these guidelines before you start planning to demolish anything or construct anything that is new.

What happens in Short Sale if I am a Buyer? A Short Sale offering is made by a Seller who owes more against a property than he believes the property will sell for in the current real estate market. The Seller will have contacted his lender(s) and provided detailed financial information about himself and his inability to sell the real estate for the amount(s) owed to secured lenders on the property. The Seller asks that the lender(s) agree in principal to permit the property to be sold at a market price that is negotiated between seller and buyer. The lender then determines whether to release the existing by examining the nature of the offer: is the price reasonable given the condition, location, and comparable recent market sales in the area.

The Key West Association of Realtors requires that a Short Sale Addendum accompany any Short Sale Contract for Sale and Purchase of Real Estate. The addendum references the contract and then interjects a provision that permits the lender a specific time period within which to accept or reject the terms of the contact. If the lender accepts the purchase price, the lender normally agrees to either release the mortgage on the real property subject to receipt of the sales proceeds less closing costs, taxes, and real estate commissions.

Other than the lender acting as the final arbiter of price, the seller and buyer are still free to negotiate the other terms of the contract. The lender's primary objective is minimizing loss and mazimizing recovery. So contracts that are all cash with no contingencies (other than inspection, survey, and clean title) are recommended. Get pre-approved for your financing before you attempt to buy any short sale property or any bank owned property.

Who pays the real estate commission? In most instances the Seller has a signed contract with the Seller's Real Estate Broker agreeing that Seller will pay a specific percentage of the purchase price as a real estate commission at closing as a fee procuring a purchaser. This fee is usually divided between the listing broker and the broker who procures the buyer. If you are a buyer you do not have to pay a Realtor for his/her services (unless you have a specific agreement to the contrary).

If you have a Question please leave a comment or send me an e-mai at kw1101v@aol.com.