Wednesday, February 8, 2012

DEAL KILLERS - PART 2    Overpricing and Flawed Appraisals


DEAL KILLERS - PART 2    Overpricing and Flawed Appraisals

In the  process of buying and/or selling  properties , appraisals are required by law but can create huge stumbling blocks.  The more  you are aware of possible pitfalls, the more you are able to deal with the current Florida real estate  market.  The old saying, “It ain’t over til it’s over” has never been more true. You’ve made a deal, Buyer and Seller are happy, and the Buyer’s bank needs an appraisal before moving ahead.  Sounds great...well, maybe... but maybe not.

Let’s look at an example, based on an actual transaction we monitored recently.   You decide to sell your home and you interview 3 real estate agents.  They all make good presentations, have nice listing packages and marketing plans, and each one provides you with the all-important Comparative Market Analysis, (CMA.)

Agent # 1 says, based on his CMA,  the listing price should be $349,000.  Agent # 2 says, based on his CMA, you should  list at $355,000.  Agent # 3 thinks your unit is so much nicer than the competition and says it should be listed at $399,000.   Of course you think your home is better than the neighbors, so you decide to go with the higher listing of $399,000.  All the stars align and, two days after listing on the MLS a  qualified  Buyer appears who is being transferred to Miami and needs a home quickly.  The offer he makes is gratifyingly near your asking price, you accept, and the buy/sell process begins.  You celebrate, thinking it’s really much easier than you thought it would be.

The property goes under contract for the asking price of $390,000.  The Buyer wants to finance 80%, which seems fine.  Then the Buyer’s bank sends out their Appraiser.  For many reasons, none of which are in anyone’s control, local appraisals are currently coming in horribly low, way under value.  The appraisal comes in at $335,000 and everyone is screaming.    

So how could this happen?  It turns out there were no comparable sales in the immediate neighborhood, so according to normal and customary appraisal standards, the Appraiser expanded the search area and found a property that was similar.  Unfortunately the expanded area, while adjacent, took in a completely different neighborhood on the other side of the highway where houses historically sold for 20-25% less than where the Seller’s house was  located.   Thus the $335,000 figure, while completely unfair, met the current guidelines and the Appraiser does not have the authority to change the appraisal.  And the bank would not lend more than 80% of the appraised value.

Let’s look at math to understand what exactly it is that throws this whole deal
Contract Price                                               Appraisal
  Purchase Price:     ​$390,000                 Appraisal Price:      ​$335,000
   20% Deposit          $78,000                 ​Deposit Required:  ​$122,000 ($44,000 extra)
   80% Mortgage:    ​$312,000                 80% Mortgage:       ​$268,000
 

So the Buyer comes back to the Seller and says, “I don’t have the additional $44,000 to close;  plus I’m not going to overpay for the property which the appraiser says is only worth $335,000."   Regardless of the facts the appraisal is flawed, and the Buyer’s feeling is valid.  Finally, the parties can’t come to terms,  the contact is cancelled and now the entire selling process begins again.  

The moral of this story:  for the foreseeable future it appears that  appraisals will be coming in low, so take this fact into consideration when pricing your condo to sell.  PRICE YOUR PROPERTY RIGHT FOR TODAY’S MARKET.  

Ray Princiotta is a licensed Florida real estate broker with Accelerated Realty, Inc.
If you have any questions, contact me at 305.494.4101 or ray@rayonrealestate.com
 

 

Tuesday, January 10, 2012

5 Real Estate Deal Killers - and What Sellers Can Do To Prevent It


OK, so you’ve decided to sell. Your property is not in distress, and you still have equity you want to protect. It’s a major decision, probably one of the biggest ones you’ll ever make and you want to do it right. The difference between a sale or no sale often rests on a only few key factors. Become familiar with these deal killers and you jumpstart your efforts as you towards your goal of closing the sale.
  1. OVERPRICING is the single biggest problem a seller must overcome. You might think your condo is worth the big money it used to be, back before the real estate market sank. Unfortunately, times have changed. With all the information available on the Internet, buyers are profoundly aware of today’s market prices. You need to get serious. TIPS: Visit the competition by going to Open Houses in similar buildings; check out listings for similar properties online and in the newspapers; and contact multiple real estate agents and get their opinion on your price.
  2. CLUTTER, DIRT, AND ODOR can take thousands off the price, and at worst case make buyers run away. This is a big purchase in a bad market so it’s up to you to make sure your condo shows favorably: clean, sweet smelling and clutter free. TIPS: Clear out all the unwanted stuff, donate or pack away your old collections, make sure table and counter tops are bare. Banish old pet beds, air out stale odors and use neutral air freshener (nothing too flowery).        
  3. HIGHLY PERSONALIZED TASTE can kill a sale. Sellers can run into problems when the decor is too unique to allow the buyer to imagine himself or herself living in the home. Unusual wall colors, floor and window treatments can be a turn-off. (it always makes me laugh when watch HGTV and I see Buyers walking through a home for sale and their biggest complaint is the color, but that is what people see...so don't fight it, fix it). To get top dollar in your neighborhood it’s important to “neutralize” your condo to conform with popular tastes. TIP: Check with local real estate agents and prepare a checklist of work that needs to be done inside and outside the property. The real estate agent can help you prioritize the list before you make a big investment in pre-sale remodeling. Also consider hiring a professional home stager. Do whatever will bring you the best return for the changes you make. 
  4. MISLEADING DEAL INFORMATION is a sure-fire deal killer. Photos that are highly edited or property described as an “approved” short sale when a bank approved a previous offer and will require new offers to go through an approval process again, are common examples of misrepresentations. TIP: It is important for Sellers and Agents to be upfront and honest. Enough said! 
  5. OVERBEARING SELLERS can easily and often inadvertently queer a deal. TIP: Back away and let the real estate agent do his job. 
These 5 Deal Killers above are in the seller's control. There is however another issue that kills many deals that is not in the seller's control - many appraisals are coming in less than contract price due to the large number of distressed property sales. This is a big problem with financed purchases. So pricing the property correctly is even more important.

Ray Princiotta is a licensed Florida real estate broker with Accelerated Realty, Inc.
If you have any questions, contact me at 305.494.4101 or ray@rayonrealestate.com

Wednesday, December 28, 2011

Ask Ray: Should We Hold or Sell Now?

HI, Ray, We inherited a house in the Coconut Grove section of Miami and we’re trying to decide what would be the wisest thing to do with it. Given the current Florida real estate market, is it better to sit on the property and continue to pay the mortgage and taxes until the market turns around or should we put the place up for sale now? Thanks, Frank


Hi Frank, There’s no quick answer here as many factors help to determine timing and saleability of real estate. Let’s consider the three major ones: Location, Property Condition and Market Trends.
First, Coconut Grove is a desirable neighborhood where properties are faring better than some other parts of Dade County so that’s a plus . Next comes condition. Today, updated Grove homes in good condition are generally selling at 2001-2004 prices. However, homes that are in poor shape and need updating are selling at very low prices, with buyers re-negotiating heavily after they complete their inspections.
As to current Market Conditions, there is a good chance prices will see little growth in the next couple of years. Downward price pressure will be fueled by bank-owned properties being released to the market in the new year. Finally, when there is hyper-appreciation like we saw from 2000 to 2006, there is usually a steep decline in prices, followed by a trough, where prices can remain stagnant for many years. Historically this is a pendulum swing that may last many years; the last such trough was from 1987 to 1996, approximately 9 years.


So the Answer? If your inherited home is in poor condition and needs updating it makes sense to sell it now and stop throwing good money after bad. But if the place is in good, saleable shape ,the next step I would recommend is to have an analysis done and get the hard facts you need to work with. The analysis should include a site visit to evaluate the condition, a CMA to determine current value, a review of carrying costs, and then run projections on appreciation. With this information you should be able to make an informed decision. I hope this is helpful,
Ray   

Buying a Condominium?

When purchasing a Condominium, it is important to know what you are buying, in terms of the actual unit, the common areas, and the Condominium Association. Condo living offers convenience, amenities, property maintenance and community living. Many considerations that must be evaluated when purchasing a condominium including total costs, condo regulations and the overall community feel of the condominium property, here are some issues.

Costs

     Condominium Association fee - This is a monthly assessment that can range from a hundreds to thousands of dollars. These fees cover the maintenance of common areas such as the lobby, elevators, hallways, parking garage, roof, facade, pool, gym, landscaping, etc.
     Unit maintenance and repairs - The interior maintenance and repairs of the individual unit are at the owner's expense. This includes all kitchen and bathroom fixtures, floor covering, lighting fixtures, painting and basically anything inside the perimeter walls of the unit.
     Special Assessments - This is a charge is imposed on all owners in addition to the regular monthly assessments. The charge is allocated pro-rata according to each unit's percentage of common elements.  It is generally related to unanticipated repairs or capital improvement projects, such as re-roofing, facade refurbishing, etc. In many cases,  a special assessment payment arrangement may be in place with a balance still owned by the unit owner. This balance is to paid by the Seller at or before closing. However, if the Seller is unable to pay off the balance, the buyer would need to negotiate the purchase price with the seller and make a request to the association to continue with the same payment terms or make other arrangements.

     Property Taxes and Insurance - Owners are responsible for the property taxes and for insuring the contents of their unit, including kitchen and bathroom fixtures, floor coverings, furniture and personal property.

Condo Regulations

Condominium regulations will dictate rules for parking, pets, noise levels, the number of people that can live in the unit.  They will also include the proper use of common areas, and specify  which changes to the exterior of the unit can be made, including painting, awnings, window treatment types and anything that has the potential to change the exterior appearance of the condominium unit.   It is important for Buyers to read the regulations carefully to ensure compliance.

Financial Stability of the Association

The Condo Association manages the financial stability of the condominium community. Potential condominium buyers should review the association's financial records to determine its ability to manage finances. The associations should have at appropriate amount of funds set aside for the day-to-day operation of the community. If the association is lacking funds, this may be an indication of poor maintenance and upkeep in the future. Another major concern is the overall status of the accounts receivable including the number and percentage of owners that are late on their monthly fees and the total amount of money due the association.

Condo living can offer you a terrific lifestyle, but it is important that you are buying into a good community with a financially strong and well-run condominium association.

Ray Princiotta is a licensed Florida real estate broker
If you have any questions, contact me at 305.494.4101 or ray@rayonrealestate.com

Monday, December 12, 2011

Aventura Recent Property Sales - October 2011

AVENTURA RECENT PROPERTY SALES - OCTOBER 2011
Address Selling Price
Previous
Sale
Bed
Bath
Sq.Ft.
Bldg
Lot Size
Price Sq.Ft.
Yr
Blt
1000 Island Blvd Apt 1506
$350,000
$325,000 (03) 
3/2
1,520
$230
1990
18031 Biscayne Blvd Unit 401-3
$140,000
$75,000 (97) 
Studio
1,565
$89
1971
18061 Biscayne Blvd Unit 1502-2
$132,000
$65,000 (99) 
Studio
1,251
$106
1971
18181 Ne 31st Ct Apt 2610
$185,000
$120,000 (97) 
2/2
1,339
$138
1981
19101 Ne 36th Ct Apt 1210
$150,000
$101,000 (90) 
1/1
1,091
$137
1989
19355 Turnberry Way Apt 27c
$170,000
$152,000 (97) 
1/1
1,077
$158
1981
19355 Turnberry Way Apt 6b
$240,000
$460,000 (05) 
2/2
1,512
$159
1981
19400 Turnberry Way Apt 1821
$379,000
$520,000 (06) 
2/2
1,425
$266
2005
19501 W Country Club Dr Apt 2203
$455,000
$560,000 (05) 
3/2
1,525
$298
2002
20000 E Country Club Dr Apt 712
$380,000
$484,000 (06) 
2/2
1,335
$285
2006
20100 W Country Club Dr Apt 1601
$78,200
$215,000 (05) 
1/1
810
$97
1973
20100 W Country Club Dr Apt 503
$95,000
$130,000 (03) 
1/1
913
$104
1973
20201 E Country Club Dr Apt 1602
$900,000
$870,000 (04) 
3/4
3,262
$276
2004
20301 W Country Club Dr Apt 323
$93,000
$67,000 (80) 
2/2
1,313
$71
1975
20379 W Country Club Dr Apt 334
$120,000
$100,100 (10) 
2/2
1,157
$104
1975
21055 Yacht Club Dr Apt 1807
$390,000
$338,000 (08) 
2/2
1,505
$259
2002
21131 NE 24th Ct
$365,000
$207,000 (03) 
3/2
1,672
9,000
$218
1958
21150 Point Pl Apt 1603
$765,000
$510,000 (96) 
3/3
2,750
$278
1996
21200 Point Pl Apt 1502
$860,000
$700,000 (04) 
3/3
2,657
$324
2004
2780 NE 183rd St Apt 709
$89,900
Studio
1,058
$85
1971
2820 NE 201st Ter Apt F325
$60,100
$170,000 (06) 
1/1
800
$75
1968
2851 NE 183rd St Apt 108E
$84,950
$230,000 (05) 
1/2
1,066
$80
1974
2861 Leonard Dr Apt F603
$77,000
$87,000 (08) 
1/1
763
$101
1968
2920 Point East Dr Apt N407
$100,000
$95,000 (04) 
1/1
777
$129
1967
2950 NE 188th St Apt 518
$645,000
$447,000 (96) 
3/3
1,869
$345
2008
2950 NE 201st Ter Unit E111
$70,000
$145,000 (04) 
2/2
1,098
$64
1967
3000 Island Blvd
$547,000
$440,000 (09) 
2/2
2,627
$208
1988
3001 NE 185th St Apt 410
$250,000
$579,000 (07) 
2/2
1,708
$146
2007
3029 NE 188th St Apt 519
$235,000
$435,000 (06) 
1/1
816
$288
2006
3131 NE 188th St Apt 1702
$566,000
$506,000 (07) 
3/2
1,818
$311
2007
3131 NE 188th St Apt 2509
$300,000
$422,000 (07) 
2/2
1,241
$242
2007
3131 NE 188th St Apt 2510
$277,000
$410,000 (07) 
2/2
1,241
$223
2007
3255 NE 184th St Apt 12401
$315,000
$527,000 (06) 
3/2
1,320
$239
1997
3301 NE 183rd St Unit 2003
$815,000
3/3
3,082
$264
2007
3575 Mystic Pointe Dr Unit 103
$145,000
$62,000 (02) 
Studio
1,050
$138
1990
3575 Mystic Pointe Dr Unit 20
$30,000
$15,000 (04) 
Studio
540
$56
1990
1000 Island Blvd Apt 2703
$365,000
$384,000 (92) 
3/3
1,840
$198
1990
19404 NE 26th Ave Apt 161a
$80,000
$255,000 (07) 
2/2
1,400
$57
1973
19501 W Country Club Dr Apt 2405
$300,000
$410,000 (08) 
2/2
1,175
$255
2002
20281 E Country Club Dr Apt 201
$259,900
$127,500 (99) 
2/2
1,800
$144
1984
20281 E Country Club Dr Apt 210
$220,000
$181,100 (10) 
2/2
1,400
$157
1984
20301 W Country Club Dr Apt 726
$145,000
$87,000 (94) 
2/2
1,313
$110
1975
20454 NE 34th Ct Unit 7
$352,000
$224,000 (00) 
3/2
2,032
$173
1978
21055 Yacht Club Dr Apt 307
$295,000
$300,000 (09) 
2/2
1,505
$196
2002
2950 NE 188th St Apt 232
$269,760
Studio
779
$346
2008
2950 NE 188th St Apt 436
$390,000
$393,900 (09) 
1/2
1,214
$321
2008
3000 NE 188th St Apt 602
$300,000
$333,131 (07) 
2/2
1,210
$248
2007
3001 NE 185th St Apt 503
$294,000
$460,272 (07) 
2/2
1,156
$254
2007
3029 NE 188th St Apt 408
$237,000
$392,746 (06) 
2/2
1,204
$197
2006
3029 NE 188th St Apt 712
$250,000
$628,000 (06) 
2/2
1,362
$184
2006
3300 NE 191st St Apt 1218
$195,000
$400,235 (05) 
2/2
1,302
$150
1990
3300 NE 191st St Apt 311
$185,000
$314,778 (05) 
2/2
1,137
$163
1990
3300 NE 191st St Apt 401
$147,000
$440,000 (07) 
2/2
1,271
$116
1990
3300 NE 192nd St Apt 1811
$163,500
$453,900 (06) 
2/2
1,062
$154
1990
6000 Island Blvd APT 2506
$1,350,000
$1,850,000 (07) 
4/3
3,222
$419
2005
6000 Island Blvd Apt 506
$1,260,000
$1,000,000 (05) 
4/3
3,528
$357
2005
20400 W Country Club Dr Apt 315
$86,000
$55,000 (88) 
Studio
1,083
$79
1972
3375 N Country Club Dr Apt 1201
$92,000
$44,000 (78) 
1/1
810
$114
1973
3625 N Country Club Dr Apt 2305
$93,000
$211,184 (10) 
Studio
755
$123
1974
20335 W Country Club Dr Apt 705
$95,000
n/a 
1/1
913
$104
1975
2780 Ne 183rd St Apt 1602
$110,000
$61,100 (11) 
Studio
1,300
$85
1971
2780 Ne 183rd St Apt 310
$123,000
$36,000 (87) 
Studio
887
$139
1971
18181 Ne 31st Ct Apt 1804
$125,000
$117,800 (11) 
2/2
1,043
$120
1981
3101 N Country Club Dr Apt 808
$125,000
$68,800 (11) 
Studio
1,083
$115
1972
18061 Biscayne Blvd Unit 1804-2
$128,000
$130,100 (11) 
Studio
1,565
$82
1971
20301 W Country Club Dr Apt 2527
$130,000
$34,500 (77) 
1/1
913
$142
1975
3625 N Country Club Dr Apt 1404
$134,000
$31,000 (74) 
Studio
996
$135
1974
7000 Island Blvd Apt 1908
$400,000
$366,000 (98) 
2/2
1,580
$253
1998
1000 Island Blvd Apt 1003
$420,000
$282,000 (97) 
3/3
1,840
$228
1990
3330 Ne 190th St Apt 1210
$437,000
$509,900 (06) 
3/2
1,866
$234
2006
19667 Turnberry Way Apt 10j
$450,000
$400,000 (80) 
3/2
2,360
$191
1980
2950 Ne 188th St Apt 131
$450,800
n/a 
2/3
1,663
$271
2008
3330 Ne 190th St Apt 2419
$458,000
$575,000 (07) 
3/2
1,883
$243
2006
2950 Ne 188th St Apt 121
$481,068
n/a 
2/3
1,663
$289
2008
2950 Ne 188th St Apt 344
$517,132
n/a 
2/3
1,552
$333
2008
3340 Ne 190th St Apt 1202
$540,000
$320,600 (11) 
2/3
2,497
$216
2005
19955 Ne 38th Ct Apt 501
$628,330
$306,100 (10) 
2/3
2,400
$262
2000
3301 Ne 183rd St Unit 708
$671,726
n/a 
2/2
2,433
$276
2007
2800 Island Blvd Apt 1701
$685,000
$740,000 (05) 
3/4
2,670
$257
1990
3201 Ne 183rd St Apt 2405
$700,000
$869,000 (06) 
2/3
2,970
$236
2003
3201 Ne 183rd St Apt 1604
$750,000
$703,705 (03) 
2/3
2,984
$251
2003
3201 Ne 183rd St Apt 2508
$750,000
$1,395,000 (06) 
4/5
3,620
$207
2003
3301 Ne 183rd St Unit 603
$800,000
n/a 
3/3
3,082
$260
2007
3301 Ne 183rd St Unit 2709
$805,000
n/a 
3/3
3,073
$262
2007
3301 Ne 183rd St Unit 903
$840,000
n/a 
3/3
3,082
$273
2007
7000 Island Blvd Apt 607
$850,000
$668,000 (03) 
3/4
2,870
$296
1998
3301 Ne 183rd St Unit 2803
$865,000
n/a 
3/3
3,082
$281
2007
3301 Ne 183rd St Unit 1904
$910,000
n/a 
4/4
3,464
$263
2007
3301 Ne 183rd St Unit 1506
$940,000
n/a 
4/4
3,524
$267
2007
3301 Ne 183rd St Unit 2807
$960,000
n/a 
3/3
3,069
$313
2007