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February 25, 2010
Posted by Barry @ 12:19 pm Tags: Bonita Springs, Cape Coral, Collier County Real Estate, Estero, Fannie Mae, Florida Real Estate, Fort Myers, Freddie Mac, Lee County Florida Real Estate, Miami-Dade County Florida Real Estate, Naples, Vanderbilt Beach
There are lots of ideas on what to do with Freddie Mac and Fannie Mae. Privatize them, get rid of them, merge the two, restructure them. No one though, has really gone as far as the National Association of Realtors. NAR is floating and idea out there that will turn Freddie Mac and Fannie Mae into federally owned nonprofit corporations. The proposal pretty much leaves the two companies intact with some structural changes. It will also keep Freddie and Fannie’s core concepts of supporting affordable housing and maintaining large investment portfolios. The proposal will fundamentally change how Washington oversees mortgages and guarantees of mortgages. Right now there is an implied government guarantee on mortgage back securities. This implied guarantee is what has allowed Freddie and Fannie to borrow cheap, often foreign, monies. That current implied guarantee will change under this NAR proposal to much more detailed, clearly stated guarantee of these same mortgage back securities. The proposal goes on to say that the two companies should have to reinvest their profits so they could build capital reserves, be self funded and continue to lend in tough economic times.
Let’s face it . Full disclosure. The National Association of Realtors is a political action committee that has a vested interest in keeping the buying and selling of real estate at as fast and frenzied state as possible. The current system has worked for NAR in the past and they like it overall. They have a vested interest in the low cost 30 year fixed loans that Freddie and Fannie have helped provide over the years. You just have to keep that in mind.
Whether you like this idea or hate it will probably depend on your own personal core ideals of big government vs. small government. Proponents who like the idea will point to all the people that Freddie and Fannie have helped in the past. Restructuring them and reorganizing them to more effective and efficient companies will help them survive in the future. Having an stated US government guarantee could help keep low cost low interest loans flowing into the market. Making them self sufficient would tamp down fears of people who fear that they are just money pits that US citizens are going to have to bail out time and again.
People who oppose this idea will point out that the current system has failed in recent years. The same ideals that allow for affordable housing loans were stretched , and shall we say slightly abused. Freddie and Fannie are in economic trouble. They currently guarantee about five trillion of the eleven trillion dollars in US mortgages and may need another bailout soon. Both the companies came under fire for already needing and taking a 100+ billion dollar bailout then bonusing top executives millions of dollars. Some also believe that we don’t need anything like Freddie and Fannie to guarantee loans. The banks will do it without them and be pickier about to whom they loans. There’s also the worry about the government getting too “big brother” and politicians being able to tell the people what they can and should be allowed to buy for housing. Will it lead to, or is the concept, socialized housing? This plan could also constitute a huge shift of money and power to the federal government. Since the government will be guaranteeing the loans they will be able to set the rules and parameters of the loans. They already do that with FHA and VA loans. Controlling the loans through the guarantees could lead to massive wealth and corruption in the ranks of the politicians and overseers of the system. You get the idea.
I don’t think this plan will actually survive in this political climate. But either way, if you like or dislike the concept, you should let your congressman know. It could make a really huge change in our lives.
I specialize in Collier and Lee Counties Florida real estate. Cities in these counties include Naples, Fort Myers, Bonita Springs, Estero, Vanderbilt Beach, Cape Coral, Fort Myers Beach, etc.
Barry Varbel
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February 16, 2010
Posted by Barry @ 5:42 pm
Downtown Fort Myers just finished a 5 year redevelopment project. Starting in late 2005 all the utilities were replaced and put underground. Sewer and storm drains were replaced. They even deconstructed several of the roads to reclaim about 500,000 old bricks under the pavement. Volunteers cleaned the bricks up and they were replaced back in the streets for an amazing effect. Landscaping and park benches were installed. The entire downtown is looking beautiful.
This project started at the end of the real estate boom. Money was flowing and there was a huge upside in refurbishing the historical downtown which in on the Caloosahatcee (a really big river which is part of the intercoastal waterway and leads to the Gulf of Mexico). Of course, the economy turned, but to Fort Myers’ credit they kept going. The local merchants took a beating because of all the construction and street closures. But the downtown survived and is looking unbelievable. Slowing and obstructing traffic to the stores and restaurants was tough on the theatre, the retailers and the restraunteurs. However, they persevered and now business is flowing back into downtown.
What does that mean for you and the real estate market? Simple. Between the prices of all the condo and high rises falling when the investors were caught by the economic downturn, and all the retail stores being strangled by the construction, prices in downtown are really low. You can buy a condo for half to two thirds the price during the boom. Retail space is still a good value. Walk to work. Walk to one of the marinas, parks, restaurants, shops, art galleries, or coffee houses. Unlike so many downtown areas, this place has great character. Each of the buildings are individuals with their own personalities. The high rises and condos are close and they are still talking about starting a water taxi to go up and down the river along the downtown shore. It’s beautiful. If you don’t like the idea of a condo there is even a historic district with mission style homes and bungalows just outside of the shopping area. Prices in this area not only were affected by the global economy they were affected by the five years of construction. The ribbon was cut on 16JAN10 and everything is looking good for downtown Fort Myers today.
February 8, 2010
Posted by Barry @ 5:40 pm
As of 01FEB10 the FHA suspended the requirement that says a property has to be “seasoned” for 90 days before FHA will lend on it. For those that don’t know what I mean by “seasoning” let me explain. When someone, usually an investor, buys a house and tries to sell it very quickly the property is not seasoned. FHA typically wants to see that person or corporation own that property for 90+ days. That time between the investor purchase and the sale to a new buyer is referred to as “seasoning”.
This temporary relaxing of the seasoning rule is really great for those first time homebuyers and other users of the FHA loan. These are typically primary homes buyers looking to buy houses (down here in SW Florida that’s Naples, Bonita Springs, Estero, Vanderbilt Beach, Marco Island, Fort Myers, Fort Myers Beach, Cape Coral, etc.) in prices below $150,000. They don’t always have the big down payment required by conventional financing and are using the FHA funding the way it was meant to be used. Lots of times I see great houses, remodeled or refurbished, priced right, that my buyers can’t buy because of the lack of seasoning. It’s also great for the investors who are buying bulk REO packages, houses off the court yard steps, fix and flips, etc. They can now sell to these primary home buyers without waiting 90 days and incurring extra holding costs.
Problem is the government and the Federal Housing Authority says ok, go do it, but the great majority of banks say wait a minute, I don’t think so. It’s almost impossible for a buyer, trying to get an FHA loan, to find a bank that will give them that loan on a property that is not seasoned. Correspondent and direct lenders are emailing and calling me and some of my real estate agent friends to see if we have any leads on banks that are lending money on flips. It’s a great idea, especially down here where there is a huge foreclosure, short sale, and bulk REO market. The banks just aren’t letting it work. Hopefully the banks will start lending on these properties to people that need the advantages of an FHA loan. If you have any questions about the FHA suspension of seasoning, bulk REO or real estate in general in SW Florida just call me or email me. I’ll be happy to talk with you about it.
Have a great week,
Barry Varbel
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February 1, 2010
Posted by Barry @ 7:54 pm
Lots of questions lately about Chinese Drywall.
HUD and the US Consumer Product Safety Commission recently did a study on defective drywall and came up with some guidelines. First, they have lots of disclaimers, about drywall made in China. The disclaimers basically say that while the problems (we’ll get to them next) are more prevalent in Chinese Drywall installed between 2001 and 2008, there is no guarantee that all Chinese Drywall is bad. Just know that this stuff can be really dangerous and you need to be careful whenever you think it is present. Fumes have been known to give people bad headaches and the molds and fumes from defective drywall can be harmful to your health, especially if you breathe it in. In really bad situations the professionals will start with and never take off their respirators. I’ve actually been warned by the professional mitigators not to go in or let anybody into a house until they fix it.
The government basically set up prerequisites and guidelines to check if there is defective drywall. They feel that in order to get worried you need to see 2-4 of these prerequisites. Most common way of checking for bad drywall is too look at the copper on the air conditioner/furnace. If the drywall was installed between 2001 and 2008 and if there is a black corrosion on the copper (copper sulfate) chances are you might have bad drywall. Other factors, though, can cause this corrosion. You can also pop off some outlet covers and check the wiring. If there is corrosion, get someone to check for bad drywall. Other indicators are markings indicating the drywall was made in China, and several tests that in most cases you need a professional to conduct.
If you have bad drywall it can be very expensive to fix. Figure anywhere between $30 and $45 per square foot to mitigate for a normal/non custom built house. The contractor literally will pull the furnace, carpet, drywall, all the trim, and maybe the cabinets. The ceilings will probably have to come out and the house is often taken to a skeleton, sanitized and then rebuilt. So, if you are looking at buying a home and you think it has bad drywall in it, have it checked and make sure that your offer makes fiscal sense. Unfortunately, a lot of the bad drywall went to the big builders. So, a lot of houses can have this stuff. Don’t get scared about buying a house because of this problem, just be aware and informed.
If you have more questions, especially in SW Florida, where I am located, just send me an email or give me a call. I’ve had several run ins with this stuff and should be able to help you out.
Barry
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January 23, 2010
Posted by Barry @ 4:54 pm Tags: Beach, Bonita Springs, Cape Coral, Collier County Real Estate, Estero, foreclosures, Fort Myers, Lee County Florida Real Estate, Marco Island, Miami, Naples, Short Sales, SW Florida, Vanderbilt Beach
People always ask me certain things. 1) How do I find/can I get a good deal in a foreclosure? 2) This house (that is a short sale) is such a good deal. Why and how low of an offer can I make? 3) What’s the differences between a foreclosure and a short sale?
Let’s take them one at a time.
1) You can get a great deal on a foreclosure. Just remember a couple of things. First, the bank isn’t stupid and they aren’t going to give a good property away. The bank has priced the property at the list price for a reason. If the price seems too good to be true, there’s a reason. The great majority of foreclosures and other REOs are listed with real estate agents. Prices on real estate on the average have dropped (in Lee and Collier Counties) about 65% fro the peak. In that respect everything is a great deal. The bank is going to have at least one, maybe two valuations done on the property before they put it on the market. That means they know what the property is worth in today’s market and they aren’t going to lose any more money than they already have. The price is going to be at market. With homes (especially those under $250,000) selling so well ( on the average almost 4% over list price in Lee County) the banks don’t have to discount a foreclosure in order to move it. Still, you can get amazing properties in today’s market. I just saw a house for $90,000. It has over 2300 Square Feet, 1/2 acre lot, well landscaped, clean and nice inside. I am also closing a property in the SW quadrant of Cape Coral Monday that has been renovated, with pool listed for $99,900. The deals are there.
2) There are lots of short sales available in SW Florida. Just so no one isn’t confused, SW Florida would include such cities as Naples, Marco Island, Vanderbilt Beach areas, Bonita Springs, Estero, Fort Myers, Fort Myers Beach, North Fort Myers, Cape Coral, etc. This isn’t the Miami area. A short sale is where the owner of the house is selling it for less than what he/she owes on it. The owner has to be at least thirty days late on the mortgage and is not allowed to make any money off the property. So, the owner doesn’t care what the contract price is as long as the bank agrees to take the deal. The listing agent sets the price and will reduce it until he/she gets an offer. The problem with the short sale is the bank. Simply put, the bigger the bank, the more mortgages on a property, the longer and more torturous the process will be. If you are going to buy a short sale you need three things: A huge amount of patience, no time constraints and cash or really solid credit. Sometimes you can actually get a better deal on a short sale than a foreclosure. However, it is rarely worth it for primary or second home buyers. Now, starting in April, there is a new ruling out that will force some banks to give an answer in 10 days. If it works, that will be amazing. I have seen some banks take almost a year to respond to a short sale contract. I have heard of worse. This new ruling has limitations, though. For instance, it will only apply to those banks that took TARP money. Many of the big banks like BofA/Countrywide/Taylor Bean and Chase/WAMU will be included. Still you won’t be able to depend on it. Especially if there is two loans on the property. As far as offers go, most banks will not accept an offer for less then 10% under market price. Most of the time they want it even closer. Short sales generally sell about 3-5% under list.
3) The differences between a short sale and a foreclosure is not so much in the pricing, it’s in the closing of the contract. While you don’t usually get in a bidding war like you do with a good foreclosure property, getting a short sale contract to close can be exceptionally difficult. If you get an acceptance on a foreclosure, it is generally within 3-14 days and you will probably be able to close as fast as you want/can. There are sometimes picky bank addendum with a foreclosure, but there are short sale addendum as well. While there are rare exceptions, a short sale will take at least 3-4 months just to get an answer. Then the bank will often try to force a quick close date. Because the Seller isn’t one person or entity, there are other factors in a short sale. HOA/management companies often will stop or try to stop a sale until any delinquent dues are paid. Sometimes the bank will pay part, but most of the time they will not pay them off and then either the buyer or the seller has to bring the rest of the amount due to the closing table. If there is a second mortgage on the property sometimes the bank won’t release the Seller from liability. If the Seller is going to be on the hook for the amount of the second, they often will not go through with the sale. Sometimes the second has made a claim with the PMI company and the PMI company won’t sign off on the sale until they get paid off. Assessments from government entities can be a problem. All sorts of things come up in a short sale. A foreclosure, once you actually succeed in getting an accepted offer, is generally simple and goes to closing much like a regular transaction.
If you have any more questions you can contact me through this website. Thanks.
Barry
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January 14, 2010
Posted by Barry @ 12:56 pm Tags: Beach, Bonita Springs, Cape Coral, Captiva, Estero, foreclosures, Fort Myers, Lee County Florida, Lehigh Acres, Real Estate, Sanibel statistics, Short Sales, SW Florida
There are basically three types of listings. The Foreclosure (sometimes referred to as an “REO”), the Short Sale, and the normal listing that we used to see all the time, every day.
Here’s some statistics to think about. The statistics are as of 14JAN10. These statistics are from the MLS of the Realtor Association of Fort Myers and the Beaches, in Lee County (which includes, Fort Myers, North Fort Myers, Fort Myers Beach, Cape Coral, Estero, Bonita Springs, Lehigh Acres, Sanibel, Captiva, Alva, etc.).
There are 8837 active non short sale, non foreclosure listings. 682 of those are pending, which means they have an accepted contract and are in the process of closing. In the last three months there has been 1766 properties closed. Low list price of $7400, high list price of $18,000,000, average list price of $422,290, median list price of $239,000, average days on market is 184, the median days on the market is 108. The average percentage of sold price to list price (the sold price divided by the list price) is 94.54%. In other words, the sold price is less than the list price. This percentage drops the longer the property is on the market. Just a note, the big difference between the averages and medians are because of the high priced properties. For instance the $18,000,000 property has been on the market for 3429 days. That really messes with the average without greatly affecting the median. Also, understand that a lot of these properties that were bought by investors and are being “flipped”. These investors buy a house, sometimes they refurbish it, then they sell it for a profit. Sometimes they buy properties in bulk. 20+ at a time. So, many of these houses aren’t your typical home owner looking to sell their private residence. By the way, the bulk sales aren’t ever in the MLS. I don’t know of any hard statistics to give you on those houses.
There are 2532 active foreclosure listings of which 1108 are pending. In the last three months there have been 2379 foreclosure properties closed.
The lowest priced active listing is $4500, the highest is $2,299,000, the average price is $86,992, the median price is $66,200, the average days on the market is 33, the median is 17 days on the market. The average Sold price to List price is 101.20%. As with the non foreclosure and non short sale properties, the percentage goes down the longer the property is on the market.
There are 5463 short sale properties active on the market of which 387 are pending. The lowest priced is $15,000, highest is $1,450,000, average price is $140,363, median price is $99,900, average days on the market is 189, median days on the market is 147. The average percentage of Sold to List price is % 95.94. Oddly enough, that percentage actually goes up for properties 61-120 days on the market.
Here’s some thoughts on the statistics. Foreclosures are the king. More foreclosures have been closed in the last three months than either regular sales or short sales. There have almost been more foreclosures closed than regular and short sales combined. If you want a foreclosure and if you are under $200,000 expect to have to offer $5000-$10,000 over list price depending on the property. Let me give you an example. Last week I wrote a contract on a house for a young couple. Busy street, $47,000 list price. They offered $55,000. There were 10 other offers within 3 days of the property being listed. They did not get the house. Short sales and regular sales are selling at market price and close to asking price. Short sales are a nightmare. They will take 4+ months to close. I have heard other realtors quoting up to 18 months. My longest is 11 months. So, you have to be patient. We’ll talk more on short sales vs. foreclosures next week.
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January 7, 2010
Posted by Barry @ 7:11 pm
This is already shaping up to be a stellar year in real estate down here. Collier and Lee Counties include the areas of Naples, Bonita Springs, Vanderbilt Beach, Marco Island, Estero, Fort Myers, Fort Myers Beach Cape Coral, North Fort Myers and other cities. One thing that I have noticed is the buyer is a little different then last year. Instead of lots of buyers in the $100,000 and down range, there seems to be more buyers in $200,000+ range. Last year we saw a lot of investors in the under $150,000 mark. They were looking to come in, buy the really low dollar properties, fix the properties, and rent or flip them. So far I have seen more of our traditional out of state buyers. Looking for the nice second home or future retirement home. These buyers are in the $200,000 and up range. The fact is that this mid price range from $250,000-$1,000,000 has some spectacular homes. At the peak these homes were selling from $500,000 up to about $3,000,000. They have great locations, amenities, upgrades and sites. They are usually a lot closer to the beach and all of our great restaurants, theatre, etc. People still want to come down here for the great weather, the golf, the fishing, the boating, all the things that make life so enjoyable down here. Now, in this price range, you can get into many of the great country club resort style communities, be on or very close to the water, get some land or even be right in the heart of the shopping, restaurant and entertainment areas of town.
The high end property in Collier and Lee counties–properties over $1,000,000–have come down dramatically in price. CNN Money wrote last October that prices in these counties could compress another 20+% in 2010. I think the compression will be in this price range. There are lots of high priced homes and condos that have been on the market for a long time. Yes they are unbelievably nice. Kitchens that will blow your mind, beach properties, properties with spectacular view, properties with personal boat docks that you feel you could almost park the Queen Mary on, Back in the boom times, big high end builders like WCI would actually fly people down in private jets to try and get them to buy new homes. When these properties drop in value, the impact on the pricing statistics is huge. It will affect the other price ranges but maybe not as much as you would anticipating. Think of a big cardboard box. Now crush it from the top down. It’s easy at first. As you try to crush it more and more flat, it gets harder and harder to do. Obviously, the comparison is the high end houses can move down in price easily. The lower the price range the harder it is to crush the price down.
It’s a great time to move down here, and enjoy one of the truly great spots in the United States.
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January 4, 2010
Posted by Barry @ 4:11 pm
Today I’m going to talk about foreclosures, primarily in the under $200,000 range. Everybody calls me about foreclosures and getting the “great deal”. That’s true, you can get a great deal with a foreclosure. Properties in SW Florida have, in many cases, dropped in value over 65% since the peak market. However, houses under $200,000 are in pretty high demand in Lee and Collier Counties (that’s cities like Naples, Vanderbilt Beach, Fort Myers, Fort Myers Beach, Estero, Bonita Springs, Marco Island, Cape Coral, etc.). They typically will sell at or above list price.
The demand for this market niche is very diverse. It ranges from people who used to be priced out of the market, such as police, firefighters, teachers, etc. that can now can buy very nice homes in today’s market, to investors and second home buyers. Investors love the new prices because they can now get the rent to cover the new mortgages, plus they know there is a huge upside potential in the real estate market in SW Florida.
Second home buyers love the fact they can get their second home in sunny Florida without breaking the bank. Don’t forget, we still have the great weather. We still have the Gulf of Mexico, the rivers, and the waterways. We still have the great fishing, the great golf, the great tennis, and all the other outdoor activities. That didn’t go away the last three years.
So, don’t listen to all the people who tell you that you can turn in a low offer and think the banks are going to thank you. I have had many buyers try to put in low offers–especially in the under $200,000 range. After they get beat out, by other offers, four or five times they understand the market down here. Now, upper priced homes are a completely different market. I’ll address those properties on another day.
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December 2, 2009
Posted by Barry @ 10:07 am
The foreclosure rate in Lee County, Florida showed signs of slowing down in November to levels that haven’t been seen in two years. There were 224 less foreclosures in November than in October; however that number still sits at 1,404 foreclosures for the month, according to a report released this week by the Southwest Florida Real Estate Investment Association!
New waves of commercial properties are showing up in the foreclosure statistics and luxury home values are still declining. According to Jeff Tumbarello, director of Southwest Florida Real Estate Investment Association, “Homes above $400,000 are taking a horrific beating.” With the unemployment rate continuing to skyrocket, many people are unable to keep up with their mortgages and are walking away from the more expensive homes.
The lower priced homes that are finding themselves in the housing inventory, through foreclosures are the homes that are being bought up rather quickly. However, many are finding that purchasing low priced, distressed property can come with some expensive repairs. The foreclosure problem may be slowing down, but according to Lee County Clerk of Court, Charlie Green, “I think we’re going to see 1,200 to 1,600 a month for a while.”
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November 2, 2009
Posted by Barry @ 9:16 am
Over the last year, a majority of the homes that are in the foreclosure process or have foreclosed have been on the middle to lower end of the price range. Here in Lee County, Florida however, we are beginning to see a wave of high-end foreclosures being filed. This wave is pulling down the prices of the homes in Ft. Myers, Cape Coral and Lehigh Acres, in the next few months that expensive beach front property may not be so out of reach for potential homebuyers looking for a deal.
Although the overall number of foreclosures has lessened, in recent months it’s the $200,000 – $300,000 homes that are falling into foreclosure. According to Jeff Tumbarello, the director of the SW Florida Real Estate Investment Association, a company that compiles monthly statistics on foreclosures, one third of the homes that fell into foreclosure in the past six months have been pool homes.
New construction is also on the rise in Lee County, however the homes that are being built now will have a run for their money as this new wave of high-end foreclosures hits the market. Up until recently the homes in inventory have been subprime mortgages for less expensive homes, but now the prime loans are beginning to enter the market adding competition to the homebuilders.
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