State of SoWal Real Estate - Spring 2009

My 2 cents worth. This whole idea of tops and bottoms in the market are not really significant for the person who wants to own a place at the beach. I sold my beach condo for a number of reasons in late 2004.I had always wanted a place at the beach but ownership did not meet my expectations. Did I sell at the top of the market? Absolutely not. I could have held that condo another six months and made an additional 30-40 percent. But five years later it appears that I sold at the right time.
If you want to own a place at the beach, now is a good time to buy. There are some good deals out there. Will the market go lower? Probably. But I believe that in five years it will not matter.

I agree. The relationship of buyers and sellers in short sales, foreclosure sales, etc are almost always unrelated making them arms length transactions.

However, SJ seemed to be relating arms length to the fact that a seller might be under duress to sell ,alomg it not an arms length transaction and therefore not a market value transaction. My point is that if a buyer and seller agree on a sales price, then by definition, market value was thereby established.

A non arms length transaction would be likened to some recent transactions in Alys whereby Ebsco bought back several properties at the original purchase price (so it seems per county records).

It all depends on which definition you believe. I am referring to the definition being taught to Real Estate Brokers, which does include transactions with duress. By the way, the Feds regulate the banks and the banks are limited on how much they can hold, so the banks are also being "forced to sell" inventory, thus foreclosures are also not considered "arm's length" by appraisers.

IMO the "definition" is that they want to disqualify any cheap comparables to keep values inflated. If you sell a home because of a death, job transfer, divorce, unexpected pregnancy (so you need a bigger place) etc. you could also be "under duress" so I am calling BS at disqualifying every sale like that as a comparable.

I can understand if it's one lot or one house, but in cases where there are multiple or a majority of sales in a certain area it's just more of the nonsense that caused this mess.

IMO the "definition" is that they want to disqualify any cheap comparables to keep values inflated. If you sell a home because of a death, job transfer, divorce, unexpected pregnancy (so you need a bigger place) etc. you could also be "under duress" so I am calling BS at disqualifying every sale like that as a comparable.

I can understand if it's one lot or one house, but in cases where there are multiple or a majority of sales in a certain area it's just more of the nonsense that caused this mess.

Well said.

One more quick comment that I will be interested in hearing what the realtors have to say...

You might even consider denying a broker's license to anyone who has more than two foreclosed properties on their credit report as that would be a red flag for a realtor who may not have much real estate common sense.

Just a thought.

Hear that deafening silence? If real estate and mortgage brokers had to pass fiduciary responsibility standards, the herd would be thinned considerably.

IMO the "definition" is that they want to disqualify any cheap comparables to keep values inflated. If you sell a home because of a death, job transfer, divorce, unexpected pregnancy (so you need a bigger place) etc. you could also be "under duress" so I am calling BS at disqualifying every sale like that as a comparable.

I can understand if it's one lot or one house, but in cases where there are multiple or a majority of sales in a certain area it's just more of the nonsense that caused this mess.

I guess it is a good thing that you are not an appraiser and have regulations to follow when appraising property.

Here's the definition I find time and time again for this term:
What part of this is not true in a foreclosure or short sale, and what part of this has anything to do with "duress"?

ONLY real estate appraisers take the "duress" into consideration. I cannot see why. Again - when the frenzy was on, and you had to plop down $50,000 in the next ten minutes to get a seller to even consider selling you a condo, why was that not duress on the part of the buyer? Why is EVERY relocation and divorce sale not excluded? Why not exclude EVERY estate sale, EVERY case where someone has lost their job, EVERY case when the fourth child made the house too small? How about when you are on a relo trip and have 48 hours to find a house or else you will have to live in a hotel for three months with the kids and the dog? That's duress.

It's silly. If you HAVE to sell, why does that make that transaction different? I also think it's misleading that they have taken a phrase which means the same thing in every other legal setting, and added this "codicil" of duress. Call it something else! Call it a Duress Sale!

ARMS LENGTH: transaction carried out by unrelated or unaffiliated parties, as by a willing buyer and a willing seller, each acting in his own self-interest.
You now have entered into the world of rule versus the interpretation of the rule. Property appraisers add "duress" to exclude shorts and foreclosures. It is interesting that even some state property appraisers offices around Florida are "requesting" that shorts and foreclosures be considered arms lenght (qualified in their words) since they represent such a large portion of the total transactions. In Walton Co. a full 30.5% of sales were considered unqualified in 2007 for your 2008 tax comparisons.

Additionally all you have to do is notice that another percentage of sales in the area be it on land houses or condos are 30%- 50% and sometimes a bunch more below peak prices so in almost all categories you can find " broker approved" comps that agree property values across the board are tanking.

Most re brokers teach the past 6 months sales of "broker approved" arms lenght transactions is what needs to be considered to do their CMA, competitive market analysis. If the room is dark can you see the 3000 pound gorilla?

Hey, I don't make the rules. I'm just telling you how Real Estate Appraisals work. They do include "duress." I mentioned nothing about logic. Logic isn't going to get you a loan, but an appraisal might help.

Hear that deafening silence? If real estate and mortgage brokers had to pass fiduciary responsibility standards, the herd would be thinned considerably.

yes, bring back debtors prisons too, because, based on the credit reports i have read, everyone needs to do a stretch

One more quick comment that I will be interested in hearing what the realtors have to say...

During this downtime, if I was a realtor, I would do my best to make it more difficult to obtain a Florida real estate sales associate license. Specifically, I would lobby hard to do away with reciprocity agreements with other states (especially Georgia, Alabama and Mississippi) and perhaps advocate changing the passing score on the exam to 80% instead of 75%. This would shut out a large number of the carpetbaggers and scalawags who are just waiting for this market to boom again. You might even consider denying a broker's license to anyone who has more than two foreclosed properties on their credit report as that would be a red flag for a realtor who may not have much real estate common sense.

Just a thought.

would you deny a broker's license to anyone brought to foreclosure due to medical bankruptcy?

Here's the definition I find time and time again for this term:

transaction carried out by unrelated or unaffiliated parties, as by a willing buyer and a willing seller, each acting in his own self-interest.
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What part of this is not true in a foreclosure or short sale, and what part of this has anything to do with "duress"?

ONLY real estate appraisers take the "duress" into consideration. I cannot see why. Again - when the frenzy was on, and you had to plop down $50,000 in the next ten minutes to get a seller to even consider selling you a condo, why was that not duress on the part of the buyer? Why is EVERY relocation and divorce sale not excluded? Why not exclude EVERY estate sale, EVERY case where someone has lost their job, EVERY case when the fourth child made the house too small? How about when you are on a relo trip and have 48 hours to find a house or else you will have to live in a hotel for three months with the kids and the dog? That's duress.

It's silly. If you HAVE to sell, why does that make that transaction different? I also think it's misleading that they have taken a phrase which means the same thing in every other legal setting, and added this "codicil" of duress. Call it something else! Call it a Duress Sale!

i would argue a party being forced from their home by the bank is "unwilling". do i have to sell you that idea?

i would argue a party being forced from their home by the bank is "unwilling". do i have to sell you that idea?

Not sure what your point is Bob.

i would argue a party being forced from their home by the bank is "unwilling". do i have to sell you that idea?

If the foreclosure is complete, they are no longer the seller.

If it is a short sale, then they have willingly ceded the pricing negotiation to the bank, for other considerations. The bank is not the one whose name is on the listing agreement, the seller's is. I agree that they are under duress, but they are not being "forced": they are choosing the option which is in their best interest. They could sit and do nothing, and let the foreclosure happen.

yes, bring back debtors prisons too, because, based on the credit reports i have read, everyone needs to do a stretch

Hey, it was Skunky's idea!

Hear that deafening silence? If real estate and mortgage brokers had to pass fiduciary responsibility standards, the herd would be thinned considerably.

I wonder if we would be in this mess if they would have applied this same logic to the buyers. To get a loan all you had to do was be able to fog a mirror and you got whatever you wanted. I had a client that had let a car go back 5 years prior and still got a loan with no money down for $525,000! He was even stunned they gave him the money.

I wonder if we would be in this mess if they would have applied this same logic to the buyers. To get a loan all you had to do was be able to fog a mirror and you got whatever you wanted. I had a client that had let a car go back 5 years prior and still got a loan with no money down for $525,000! He was even stunned they gave him the money.

do you still own the property?

If the foreclosure is complete, they are no longer the seller.

If it is a short sale, then they have willingly ceded the pricing negotiation to the bank, for other considerations. The bank is not the one whose name is on the listing agreement, the seller's is. I agree that they are under duress, but they are not being "forced": they are choosing the option which is in their best interest. They could sit and do nothing, and let the foreclosure happen.

no one party on the selling side in a foreclosure or a short sale is willing. additionally all parties are under duress for reasons that are rather obvious. this is why the transactions are noted. coercion by threat of foreclosure does not afford the owner a choice. the transactions are one in the same in that they are on different lengths of an unknown but rather certain timeline. the only question is the ultimate loss to the owner and lienholder.

Not sure what your point is Bob.

forced sales are all unwilling, or so i believe........nothing more

do you still own the property?

I did not own the property. Does the buyer still own the property? Of course not. They bailed as soon as it started getting ugly. But not without getting a second mortgage first.

A lot around the corner from me sold recently ($70k). It was from a bank to an individual and it is listed as a "qualified" sale on the pa site. I am under the impression that "qualified" means it is a regular transaction of the "arm length" variety being discussed, is this correct? I would have paid half again what this property was sold for had it been on the open market, and some would've paid double. It is apparent to me that this property should not be used as a comp. But my understanding of the "U" and the "Q" may be skewed.

Yes, Qualified sale means arms length transaction.

Below is definition of Qualified sale on the WaltonPA website:

Field Descriptions

Qualification
Because the Property Appraiser's office uses actual sale transactions when analyzing property values in utilizing the comparable sales method of valuation (one of the methods used in considering value), it is important that we use only sales that represent an ''arms length'' transaction. That is - a sale of property between a knowledgeable buyer and a knowledgeable seller with no undue influence that may have affected the price.

The sale qualification applied by this office makes no judgement value about the parcel's sale transaction except to say that we will or will not use it in our analysis because the sale price ''may'' have been affected by some other influence besides the fair market price.

For example, a parcel sold by parents to their children ''may'' have been sold for a price lower than the parents could have gotten on the open market. A seller who agrees to finance the sale to the buyer personally is more likely to sell at a higher price than the market because of the extra service, and the buyer more likely to pay more for the same reason. In both of these cases, we would choose not to use these sales for analytical purposes because they may not accurately represent the market.

Question about lot price vs. value

I'm new to this so I apologize if I've done something wrong! I have a question regarding lot values. My husband and I have been watching the real estate market on 30-A since 2005. We love the area and are looking to make a long term investment there... more specifically in Watercolor. We are currently looking at lots in Phase II... WOW what a range of pricing! The prices are all over the place. In reading this thread I noticed a discussion on this very topic in a different development. How do I know what to offer the seller? Yes, all the lots we are considering are in either short sale or foreclosure. That being said the price spread is still $135,000. The lots are similar enough in size and two of them are right across the street from one another. Can we (being you guys and myself) begin a discussion? I do have an experienced realtor I'm working with, but as with any major decision, I would prefer to hear from more than one professional. Thanks for your help.

The various range in pricing is what is making our business not so funn. It is very confusing for a buyer. It also seems that many sellers still have a price based on what they purchased the property at or what they have in it. Unfortunately, short sales and foreclosure are becoming or are the market. We can debate this until the cows come home but the reality is if I am going to throw my money in I want the same or better deal then the last guy. In order to establish a value of the lot you are looking at take a look at solids for the last 3 months. Many appraisers will use the past 6 months but remember you are the buyer. If no sales in the past 3 months, the prices are too high. Also look at actives. The active prices are a good indicator of where the value is headed. If you have competing active listings that are much lower price then the piece you are looking at the seller of the higher price probably falls in the above category. Not a real seller. He may be within time but not yet.

The various range in pricing is what is making our business not so funn. It is very confusing for a buyer. It also seems that many sellers still have a price based on what they purchased the property at or what they have in it. Unfortunately, short sales and foreclosure are becoming or are the market. We can debate this until the cows come home but the reality is if I am going to throw my money in I want the same or better deal then the last guy. In order to establish a value of the lot you are looking at take a look at solids for the last 3 months. Many appraisers will use the past 6 months but remember you are the buyer. If no sales in the past 3 months, the prices are too high. Also look at actives. The active prices are a good indicator of where the value is headed. If you have competing active listings that are much lower price then the piece you are looking at the seller of the higher price probably falls in the above category. Not a real seller. He may be within time but not yet.

So if we really preferred one of the higher priced lots could my realtor approach the seller with the argument of other active listings' prices being much lower and therefore we are approaching this lot with that in mind? You are right in that I don't want to pay more than the neighbor... or the next guy! There is lien holder approval required on these lots and I understand that can be a lengthy process.

Naturally my realtor will need to give me recent sales. I suspect there won't be a lot to comp. in the last three months... or even six that would match current prices. I am the same as any buyer.... I want to be smart about my investment and feel confident in the transaction.

I appreciate your input and look forward to other opinions... thanks!

On a side note... are you the same surfing enthusiast that writes editorials for the 30-A Review?