24 December 2009

Merry Christmas!

A Very Merry Christmas to you and your loved ones.

11 December 2009

What about Foreclosures and Short Sales?

Even though the subject has been nearly beaten to death, I receive enough questions about short sales and foreclosures that a short primer seems a good idea.

Both Foreclosure and Short Sale are neither for the faint of heart or for those with little patience and time. They can be an opportunity, but also a money pit of the first order.

In a Foreclosure, a property gets sold off in an auction-type format. Commonly this happened on the steps of a courthouse, in Florida it increasingly takes place online to level the playing field for non-professional home-buyers. The largest of the 12 Florida counties to conduct online foreclosure auctions, Miami-Dade County as an example opened their foreclosure website on December 8.

A Short Sale is a real estate sale before a property goes into foreclosure, fetching a price below the current mortgage value. Contracting partner and seller is the current owner of the property, though the lender has to agree to the contract and is the de-facto negotiation partner. Because the bank hopes to minimize it’s loss, it will look for the best and highest offer as long as possible and even try to bid up offers. A short sale is anything but short: a time-frame between three and six months from submitting an offer to closing is typical.

Short sale asking prices are teaser prices; selling prices are almost always substantially higher. Cash offers with no contingencies get the nod, or put differently: if the buyer doesn’t have bullet-proof financing lined up and/or asks for inspection contingencies, s/he is wasting time.

A variation is the pre-approved short sale, where the bank has agreed to sell the property if a specific price is reached. This is not the norm though. Experience shows that the pre-approval should always be obtained from the bank in writing, otherwise it can be considered worthless.

Foreclosure- and Short Sale-properties are usually in some state of disrepair and may be uninhabitable (vandalism, mold, roof damage, missing toilets, sinks, pipes, etc.) A buyer can not expect any price concessions and has to deal with visible and hidden problems on his/her own. Repair costs, which can easily eat up the savings in buying the property, can not be financed. Some examples I recently encountered:

Liens, second mortgages, unpaid taxes, utility bills, homeowners or condominium dues and open judgements can significantly add to what originally looked like an attractive price.

At the end of the day, a Foreclosure or Short Sale may not turn out to be significantly cheaper than buying a non-distressed property that comes without excessive headaches, but whose price probably has been driven down considerably by the large foreclosure and short sale inventory.

(Above is an edited excerpt of my guide "Buying And Selling Florida Real Estate", which is available as a PDF in English and German and can be requested here.)

04 December 2009

Property Values: What to expect for $250,000 to $350,000

In this new series of posts, I will explore how much modern home per Dollar you currently can expect in SE Florida. With asking prices as of yesterday ranging from $179,000 to $42,000,000, expectations from a modern home at $75 per square foot surely differ greatly from one for $2,100 per sf.

In the first installment today, I will look at modern homes listed between $250,000 and $350,000.

In this price bracket, over half of the listings offer three or more bedrooms, but the houses are certainly not huge. Square feet under air – assuming that you want to live in air-conditioned space or don’t count your car port as living space – range from 1,020 to 2,274, with one lonely outlier of (unverified) 3,542 sf. The average lies somewhere around 1,800 sf.

Half of the homes in this price range have a pool, 55% have a garage. What you do not find in this group is new construction: the majority was built between 1950 and 1970, the youngest house in this group is still 21 years old.

But the homes are often in good to very good upkeep. Updates are quite common, but not always in the spirit of modern architecture: Mexican or some funky tile on top of terrazzo, lead-glass front-doors, country cherry kitchens with stainless-steel appliances and granite counter-tops or bow/bay windows are quite typical.

So either a remodeling budget or willingness to live with a stylistic mismatch for a while are helpful. Occasionally I see homes in original condition, often even well-kept: those are much easier and more fun to update in period style than a house that needs to be de-renovated.

From the houses on my for-sale list (remember that there is no “modern”-specific search in the SE Florida MLS) between $250,000 and $350,000, I chose six examples typical for this range:

Fort Lauderdale: 2/1 with room to expand, ca. 1020 sf, pool, carport, short-sale listed at $249,000. Notice the original corral wall and clerestory windows.

Boca Raton: 3/2, 1896 sf, remodeled, keystone entry, fireplace, marble floors, cabana bath, pool. $298,000.

North Bay Village: 4/3, 2577 sf, remodeled, pool, $349,000. Note the kitchen renovation: corner window meets cherry cabinets.

Lake Worth: 2/2, 1162 sf, garage, completely renovated, $249,000. Noticeable: crown- and door-moldings in a modernist home.

Delray Beach: 2/2, 1740 sf, PGT windows, sunken living room, diamond-brite pool, large lot, carport, $349,000.

Fort Lauderdale: 2/2, 1102 sf, waterfront with ocean access, move-in condition, new kitchen (with Mexican tile), fireplace, room for pool, short sale listed at $269,000.

In summary: between $250,000 and $350,000, you certainly can find interesting mid-century modernist properties. It helps tremendously if you are not in a hurry or if you are geographically flexible, as the houses shown here are over 40 miles apart.

Interested in more examples, questions regarding any of these properties, or would you like a specialist for modern architecture – that would be me – help you find the right home? Then do let me know. I look forward to hearing from you.