Cape Coral Florida Golf Course and Waterfront Homes

In response to another Realtor's request for assistance with short sales, I wrote the following note. I thought it might be helpful to anyone just starting short sale work.

1. The 1099 issue is a whole study in itself. Generally, if the owner is living in the house and has the homestead exemption, there will not be a 1099. Again, in general, an investor will get a 1099 for the bank's ENTIRE loss, including fees, atornies, etc. There are many, many exceptions and I suggest you get a copy of the current Federal rule, which has been posted by several people on Active Rain. As noted, cash out re-fis will usually trigger a 1099 unless the bank has a policy against it.

2. Setting a short sale price is a study. I personally have never had a bank tell me what they will accept on a short sale until we had a contract signed by buyer and seller and we had a bank appraisal (and BPO) in hand. Then the asset manager has some numbers to work with. Once they give you this bottom line number (by letter) they usually will not budge, so if you go to closing a few dollars short, guess who has to eat it? The listing agent is always in the weakest negotiating position, so if the selling agent or buyer agree to contribute to a shortage, give thanks! During the hey-day we did a lot of Net Price Deals in land sales. We had to work backwards from the Seller's Net to get the total sales price. Short Sales usually turn out to be Net Price Deals!

3. You will need a preliminary HUD to send to the Asset Manager with the contract. Be advised that the numbers on the HUD enter into the bank's pricing decision. Study it carefully before sending it to the bank. Talk to the buyer and/or buyers agent to get them prepared for any price increase that might happen. Make sure that your title company takes this seriously and does not screw you by coming up with different numbers for closing. YOU WILL EAT THE DIFFERENCE!

4. The firmest rule in short selling is that there are no rules. Banks usually dictate terms and conditions....take it or leave it, so be prepared and have your buyer prepared. Buyer can write all sorts of conditions in the ammedment section of the contract....Bank will often not even read it, let alone pay attention to it. Like in sandlot baseball, He who owns the baseball makes the rules.

One of the largest mortgage banks recently circulated a notice to its' many branches to GET SERIOUS about processing Short Sales. I have noticed some spedup in response, for what it's worth.

Note: I like to slowly study the contract and any amendments before taking any action on a short sale. Even more so than on a regular deal. Always talk to the other agent and/or buyer before taking the next step....look for problems at every turn. Ask yourself: "How will this look at closing?". Talk to the asset manager as often as you can & ask for guidance. You will get precious little, but take seriously what you get. By doing this you try to avoid getting backed into a corner where commission give-backs are the only solution.

A new website promotes the homes of Pickwick Pines Resort for Sale or Rent by Owner.

http://www.FSBOPickwick.com

This month a Showcase Home in the Pickwick Pines Resort is:

http://1BrettBluff.fsboPickwick.com

The resort is located in the rolling hills of NE Mississippi on the Pickwick Lake impoundment of the Tennessee river. Across the River to the North is Savannah,Tennessee and just a few miles to the East is Cherokee, Alabama. Seventy five miles of water for boating, fishing, jet skiing, water-skiing, or what-have-you. And if that is not enough, how about a couple of hundred miles on the Tombigee Waterway, which connects to the Pickwick Lake and heads South to Mobile, Alabama?
The Pickwick Pines Resort offers boat storage on-site plus lots of room for ATV fun and Four-Wheeling. Bring all your toys!

See some pix of the resort and area:

http://www.jimgibson.biz/Pickwick_Pines_Resort/page_1890953.html

While you are there, take the family over to the Shiloh Civil War Battlefield. It is a sobering experience. While you are over there, have dinner at the Catfish Hotel. Be prepared for the best ribs or fried catfish you can find ANYWHERE! Debate rages as to whether the Old Catfish Hotel (which burned) or the New Catfish Hotel have the best meals, but believe me, you won't leave unsatisfied.

As we begin the long recovery in real estate sales and prices, many real estate investors are coming back to test the waters. The primary motivation seems to be that they can buy inexpensive homes now, rent them at a small negative cash flow for three years and then turn the investment over for a nice total return.

Where I have questioned this practice is whether buying the low-end homes will give the best total return. It seems to me that buying mid-range homes on a golf course or on waterfront lots would seem to give more acceleration on price looking down the road. Several investors I have talked to say "Yes, but I like to stick to the bottom rung on the ladder."

The rents are another issue that I have thought about. Right now rents have crashed due to the large number of homes for sale. Interesting, though, that many renters have already been burned by renting homes in pre-foreclosure or in Short sale status. If the bank evicts the owner, the renter gets swept away with the same broom (or Sheriff). Not nice to get thrown out on short notice after you paid the rent for the month. So what I see happening is that for stable situations, rents have already started to creep up. Ii would expect this situation to accelerate over the next year as more homes are foreclosed and inventory continues to shrink.

I tried to find a Cape Coral Golf Course Home For Rent for a client last week and found NOTHING withing a half mile of the Golf Course. Even called several owners I knew to see if they would have interest. NOTHING. To be sure, there are still several beautiful vacant homes on the Coral Oaks Golf Course, but they are all either builder product or short sale offerings that won't be rented. Two vacant homes sold recently on Coral Oaks, and neither will be a rental.

The Coral Lakes Development had their infamous "sale" last month, adroitly handled by a top Real Estate Professional. All of the builder inventory was sold, mostly to homesteaders. Low-Priced Rentals at Coral Lakes have virtually disappeared from the MLS. Ditto the situation at Tarpon Point and Sandoval. The remaining single family dwellings for rent on the MLS seem to be dominated by the $100 commission generosity, which just might be a reason why nobody has tried to show them.

Talking to a couple of rental agencies recently, I hear a lot of complaints about the workload, due mostly to foreclosures popping up unexpectedly. All of them say that they could rent anything they can get their hands on right now if it is a clean deal.

Where this leads me is that I think rents may move sharply upward in Cape Coral when the "snowbirds" come back in the fall. While few "snowbirds" will look for year-round rentals, they will sop up a lot of seasonal rentals at good prices, thus drying up availability.

The next logical extension of this thought process is that our overall residential real estate recovery will probably accelerate in the fall of 2008. Already, we have had a better April than anybody expected. Very little of the activity came from snowbirds. Just the previously mentioned Investors and homesteaders. And in April, I noticed that REOs are not coming to market quite so aggresively priced. Anything under $100,000 in good condition attracted multiple bids. Hooray!

I'm VERY bullish on the Cape Coral Real Estate Market right now. It looks like the long dry spell is coming to an end.

The Lee County Real Estate Market is improving for some folks and getting worse for others.

According to an article in the Business & Money section of the News-Press this morning, "Foreclosures hit new high". Foreclosure "actions" filed in Lee County in April spiked up sharply to a new high of 2160. By "actions filed", one would assume "Lis Pendens", meaning that the mortgage holder has initiated the first legal step of filing notice to the homeowner and the rest of the world that they are beginning the process of taking the home. for each of the homeowners, there is still a long road ahead before the home is actually changing hands. In some cases, the home is taken by the bank in just a few months and it is quickly put back on the market. In the article, Mortgage Broker and Investor Jeff Tumbarello, is quoted as saying that mortgage holders selling after foreclosure typically lose 50 to 60 percent of what they lent.

In our experience over the last year, we have seen many banks delay the process of completing "the take" because of this impending Big Loss. Whether they are trying to time the loss for reporting to their shareholders or whether they are trying to let a short sale happen, I don't know. But I have seen a couple of these situations drag on for over a year, still to be concluded.

Homes put back on the market at huge discounts, have attracted many investors and home buyers in the last four months. Investors, as opposed to speculators. Looking for a three to five year turn as opposed to a 60 day "flip". Particularly, new or nearly new homes that sold for $250,000 in 2005-2006, are now being sold as re-pos for about $100,000 if they are in like-new condition. Distressed homes are going for less. $75/sq ft is typical for a like-new property and $60/sq ft is typical for one with some issues. Typical issues are missing appliances, missing air conditioner, needs paint inside and/or outside, and occasionally some actual damage to walls or ceiling. It is unusual to find a foreclosed home without landscape issues.

A bright spot on the horizon is the lack of new building activity. While a couple of development builders don't seem to have "gotten the memo", most everybody else is hunkered down and avoiding new building efforts. Cape Coral reported 13 permits in April, up from 12 in March. This compares to April, 2007 when 115 permits were issued to some folks hopeful that the building recession would be a short one. Hope springs eternal! single family permits in unincorportated Lee County were 47 for both March and April. Tha'ts down from 262 issued in April, 2007. Remember, by April, 2007, the boom was officially over and we were deep in the throes of a home sales BUST.

Disturbing to me out of all this is that one third of the new foreclosure action in April were for owner-occupied homes. This building recession has spread to a lot of folks who don't fit the profiles perceived by the media. Sure, some of them were sub-prime borrowers to start with, but many were not. When is Congress going to act? We just cannot afford to sit back and watch homestead properties get foreclosed and go vacant. In other circumstances, maybe. But the country is teetering on the edge of a major recession. Politics aside, I hope that all of you are writing letters to your congressperson to express your opinions.

GOOD NEWS!

The headline in today's business section jumps out to say that the Glut of (vacant) Homes in Lee and Collier Counties (Florida) is SHRINKING. Now I just wish that the headline was on page one of the main section, like all of the negative reporting has been, but I'll take what we can get!

Yesterday I was working up a listing price for a luxury home in central Cape Coral. We had tried unsuccessfully to sell the home a year or so ago and had very little interest from anybody, regardless of price. The owner rented it out at a negative cash flow for a year. Recently a municipal utility expansion project had the street all torn up. So now there is an assessment on the property, but it does have enhanced water, sewer and irrigation water systems. In doing my comparison shopping on the MLS, I discovered several similar models from the same luxury home builder, all located nearby. All were recently sold or pending sale. Surprise! There are people buying these upscale homes! And the prices are not that bad. At least, not in context. all of the homes would have brought $600-700,000. back in the day, and now they are under $400,000. That's less dicount than we see on houses that were $250,000 and now sell for $80,000.

Recently, I assisted in the purchase of two homes by an investor friend. He was looking for something under $100,000. in Cape Coral, which should not have been much of a problem according to the MLS reports. Over a period of three weeks, We got him two homes, one slightly over $100,000, but I was amazed at how many offers we lost because of multiple bidders. It is like a feeding frenzy for the bank-owned homes (REOs).

Short Sales are still difficult because of slow bank response to offers, but that is another story. when will the big banks catch up....or wise up? Finalizing a short sale is a lot less painful to all concerned than going all the way down the foreclosure road.....in my opinion, of course.

Somebody said in their blog recently that If you are looking for a bottom, better look in your rear view mirror. I like the way that rolls off the tongue and it sounds more true every day that goes by.