University Place is a gated community like many East County communities.  But unlike the others, University Place’s gated status has been at risk over the past couple of weeks.  Medallion Homes was seeking a development plan revision for their upcoming Riva Trace project on the northern border of University Place.  Most of the proposed changes were minor to moderate, but one was significant and would impact values and quality of life in University Place.

Medallion had a problem.  The county had previously forbidden left turns onto Honore Ave out of Riva Trace for safety of the fire station.  So Medallion decided to petition the county to allow its residents access through University Place roads.  This meant elimination of the fully gated status for University Place.  Medallion was confident they could get this approved because University Place roads are public but gate restricted under the Community Development District agreement with the county.

Residents of University Place bought into a gated community.  They paid on average about 6 to 7% more for their homes than an equivalent non-gated community.  Likewise, the homes in a gated community generally retain resale value better than non-gated communities.  So any violation of this status would have a direct impact on home values in University Place.

University Place HOA organized and challenged Medallion Homes.  They hired an attorney, defined a list of issues, assigned residents to research and prepare presentations.  On Tuesday May 25, 2010, about 100 residents attended the Manatee County Board of Commissioners meeting to voice their concerns.

At the end of the day University Place won.  The gated status will remain and the county along with Medallion and University Place worked out an alternative solution so future Riva Trace residents can turn left on Honore without going through University Place.

This is a huge win for a community.  Home values will remain intact.  Traffic will not increase.  And the joint effort by residents has brought a community closer together. 

Buyer (Kevin) looking for a second home under $150,000 that is a super deal and a super house, something that is in good condition, nice lot, does NOT need major renovation, in zip code 34233 for easy access to Siesta Beach.  Two years ago you would have said no way, but today it can happen if you are QUICK.  Really QUICK.

Zip 34233 currently has 22 single family homes for sale under $150,000.  Of those, 21 are older from the 50s, 60s and 70s.  Only 1 was built in the 1990s.  Most appear to need a lot of work. 

Enter 5186 Old Ashwood, great location, built 1997, Bank Owned, hit the market after business hours on Tuesday April 20 with an asking price of $94,050.  I showed it to Kevin on Saturday April 24.  It was obviously a great deal.  Comps on the street ranged from $140,000 to $170,000.  It would appear the bank under-priced it.

So here it is, the super deal.  We called to make an offer.  Too late, they already had over 20 offers submitted.  The bank was mulling them over to pick the best of the best. 

Yes, over 20 offers in the first 3 days. Still wonder if the lower end market has turned?

I recently had an investor who put all four of his rental properties up for short sale.  Three were just outside Lakewood Ranch with loans from Bank of America and one was with US Bank.  Bank of America approved all three of their shorts though it took several months.   US Bank on the other hand denied the short sale because the seller had never lived in the home as his primary residence.  

US Bank did not respond to the legal team who was processing the short.  Instead they called the owner’s wife at her home and asked her very personal questions to verify their hardship story, and they asked if they had ever lived in this property.  She was honest and told them no.  It was a rental.

US Bank advised her that they do not accept short sale deals on anything except a primary residence.  The deal was dead.  The lesson here is not just this one bank and one deal, but rather that the short sale process is still unpredictable.  There are a lot of inconsistencies in how banks handle short sale situations.

Attorney Jamie Ebling of Berlin Patten PLLC was processing this deal and has extensive experience with short sales.  He sees this as a trend but not a rule: “US Bank seems to have taken a tough stance on investment owned short sale properties.  Several of its negotiators have informed our short sale team that short sale investment property is not readily being considered for approval.  Although I do not believe this is a hard and fast rule across the board it does show that some lenders are taking a different stance on investment properties versus primary residences with regards to short sale transactions.  “

Moral of the story: buyers and sellers need to evaluate the situation before they go to contract.  Ask questions to evaluate the odds of success: who are the banks, is it a primary residence, are there multiple loans, is there an actual hardship, etc.  Learn from others, but also realize the playing field keeps shifting.

Ask any Realtor in town which bank is the slowest on earth at processing short sales.  The universal answer is Bank of America (BoA).  Most other banks average 60 to 90 days to process and respond to a short sale offer, but Bank of America has been averaging 130 days or longer.  Such delays are incredibly frustrating for all parties involved. 

BoA recently rolled out a new short sale tracking system named “Equator”.  I am not saying the train is on track, but there appears to be a light in the tunnel.  Out of my 8 pending short sale contracts with BoA, we have received more communication from BoA in the past 4 weeks than in the previous 3 months. 

Equator not only tracks progress, but it imposes standard timeframes that BoA employees are supposed to hit.  Now when a file is submitted an internal deadline date is set by the system for response to that step.  Once that step is completed the next deadline is set, etc.  Prior to Equator there were not even target deadlines for the bank. 

Anne Weintraub, real estate attorney and partner at Syprett Meshad PA, says “I actually love Equator because the deadlines are right there on the screen.  Now I have some punch when I escalate to a supervisor to complain and push for my clients”.   There is no financial penalty if they miss their own deadline, but it gives them targets to hit and that is a significant improvement. 

Only time will tell, but right now it looks like BoA may actually speed things up to the point where they can process and answer a short sale offer in under 100 days (I know, that still sounds insane). 

This is good for the entire Sarasota and Bradenton area market. The faster we can get distressed properties done and gone the sooner we move to the next phase of market recovery.   I never thought I would say this, but go BoA go.

Most people only pay attention to home sales (new and resale) as the primary indicator of market health, but the unfurnished single family rental market is also a decent indicator of overall market health and direction.

In late-2005 and early-2006 the market was getting flooded with single family homes available for lease.  Nobody wanted to rent because buying was too easy.  Yet supply of rental homes was growing at an alarming pace because so many people were buying them as investments. 

Actual example of a home in University Place:  A home that had commanded $2000 a month in 2005 would only bring $1750 by mid-2006.  The market continued to deteriorate from over-supply.  That same house would only bring about $1550 by late 2008.  Things have changed.  That house now commands $1750 again and it is likely to be back at $2000 later this year.  

In 2006 University Place had 5 to 7 homes available for rent at any given time.  Right now there are no unfurnished homes on the market.  In fact, there have only been 3 or 4 come on the market over the past few months and they rented quickly.  Surrounding neighborhoods have similar low inventory levels: Lakewood Ranch, River Club, etc.  

Supply is down:  Investors and speculators are gone.  They have sold or been foreclosed on, so their rentals are off the market and occupied by new owners who bought at low prices. 

Demand is up:  More recently dozens of homesteaded owners have had to sell their homes via short sales.  Their credit is damaged so they have to lease a home.  The short sale market has caused a flood of tenants who have no choice but to rent.

This tells us the overall market is improving.   Fewer homes are being offered for lease, so fewer investors and speculators.  More and more people are buying for their own use (second or primary home), so we are still appealing to snowbirds and permanent residents.  And the short sale displaced families are moving into rental homes so they can stay in the area.

The rental market tells the story before the resale market (it is almost always well ahead).  The rental market is already at a point of under-supply and excess-demand.   Pay attention to this market indicator.

The Greater Sarasota area market is better than it has been in several years.  According to the Sarasota Association of Realtors, the market closed 6699 sales in all of 2009 versus 5459 in 2008 (Solds: 22.7 % increase).  The overall property inventory has reduced from well over 10,000 in 2008 to almost 6000 today.  (For Sale: 40% decrease)



That is the foundation for market improvement, but price points are still being impacted by “short sales” and bank owned foreclosures. (Distressed sales closed: 136% increase in 2009)   But new foreclosure listings in many of the East County Neighborhoods that were hit hardest over the past few years is past the foreclosure peak.  Yes there are still foreclosures being filed today, but the pace is slowing in my immediate market areas. 

Supply is down.  Demand is up.  Distressed homes for sale are thinning. 

Expect to be asked to pay fees and charges that are not traditionally paid by the buyer.  You wanted a steal.  You are getting the house below market value.  Cough up the cash if it means saving the deal. 

Case in point:  5518 Whitehead St in The Harborage.  Original owner paid $366,000 in 2005.  My buyer closed on a steal via Short Sale this week for $190,000. At the last minute Bank of America changed the terms.  The seller had to pick up additional closing costs.  The buyer had to pick up the Seller’s $2500 in unpaid HOA dues and fines from earlier in the year. 

The buyer would normally balk at the thought of paying someone else’s HOA fees and fines, but the pursuit of the deal outweighs the way things should be.  The buyer paid the fees and took the steal.

Sarasota attorney Anne Weintraub, partner at Syprett Meshad, says the buyer is asked to pay non-traditional fees in about 35% of Short Sale deals, and that number is growing as banks look for ways to reduce their losses.  Expect the unexpected and accept it even if you don’t think it is right.  The deal is more important than paying just what you are normally expected to pay.  

Short sales have dominated the local real estate market for the past couple years.  They have driven down prices and been the force behind our reduction in inventory.  Everyone knows someone who has sold their home as a short sale (where the bank takes less than is owed on the loan).  There have literally been hundreds of homes sold this way in Lakewood Ranch, Sarasota and Bradenton.

But the world of Short Sales is shifting under our feet.  The Making Homes Affordable (MHA) program from the federal government is creating new rules and processes that will alter the way we do Short Sales. 

CHANGES:  Prior to being allowed to do a short sale, nearly every short sale candidate will be expected to apply for a refinance or loan modification under one of the new federal programs.  The Fed wants to ensure consumers have a shot at keeping their home before they lose it.  Sellers will have to attempt alternatives before being granted short sale status if all else fails.  If approved to do a short sale, the bank will set the listing price based on what makes financial sense for them.  Thus the bank will have to do a lot of work prior to the listing (as opposed to after the offer like it is today).

GOOD:  The Fed is trying to create consistency and reduce the number of homes lost.  In the past every deal and every bank was completely different.  Some deals that should qualify for a short sale were denied while others that should not qualify have been successful.  Some are approved in 30 days while others take 6 months.  If this works, homes that are listed as a short sale should be approved much much faster and should be nearly assured of being approved at the asking price.

BAD:  No matter what the Fed says, this will slow things down even more.  This change will shift the delay to before a home is listed versus after an offer comes in.  Homeowners who want to try and sell short will get frustrated over having to wait several months while they apply for loan modifications and the bank does up front work.  It could ultimately take several months just to get to the point of listing the house for sale.   A sellers credit will damaged even worse due to the long delay before they can sell.

REALITY:  Nothing the Fed puts out gets implemented as intended.  Things are going to change and banks are going to create workarounds and exceptions.   Sellers will be more frustrated by all the rules and upfront delays, but buyers will appreciate the quicker approval time on the backend.  We will probably see an overall slowdown in the number of homes coming to market as a short sale in the next few months.   That might help stabilize the market further, but on the other side several of those sellers who wanted to sell short will end up being foreclosed on because they did not fit the Federal guidelines.  We will see how it plays out over the next 6 months.

So you are selling your house via a Short Sale.  You qualify for a hardship: loss of income, poor health, death in the family, etc.  You can no longer pay your mortgage.  You provide everything the bank requests of you: tax records, bank statements, pay stubs, a hardship letter and more.  You bend over backwards to provide it in a neat organized format like your Realtor or Attorney advised.

Your Realtor brought you a reasonable offer after 60 days on the market.  Everything was sent to the bank as requested.   You wait 3 months to get a response from the bank.  What happens?  The “negotiator” at the bank starts jerking your chain.  He clearly has attitude.  He seems to be enjoying listening to you sweat.  He drags his feet for another 4 weeks with meaningless requests and delays. 

He finally says he will approve the short sale, then says it has to go to his boss for signature.  He assures you it will be emailed out the next day.  24 hours later you inquire where it is.  He neglected to tell you that his boss is out of the office for a few days, so it will have to wait until next week. 

He calls the next week to tell you they are denying your short sale request.  No real reason.  He just doesn’t think you fit their guidelines (Yet 3 weeks earlier he was fine with it).  WHAT IS GOING ON????  It is called a power tip and you are the victim of an $8 per hour bank employee who is thriving on his new found position of power.

Exaggeration?  No.  This is a real scenario that one of my clients experienced with one of the biggest two banks in this country.  Short sales can result in great deals / steals, but many are a royal pain in the butt.  Remember the #1 rule in short sales: patience, patience, patience.  And don’t forget the #2 rule: brown nose the negotiator.  He or she controls your future.  Piss him off even a little and you are done.

Most buyers today start out in search of a “steal”. They have been primed by the media, friends, family and co-workers to believe that they should be able to buy the house of their dreams at 50 cents on the dollar.  Can they get a steal?  Absolutely.  Will it be the house of their dreams?  Not necessarily.

There is a fine line between “steal” and “deal”.  Buyers have to ask themselves what is most important to them: price or house.  I have seen buyers who lost sight of the house in search of the deal. 

A healthy goal might be looking for a great deal on a house you want to call home.  Good deals can be had.  The market has adjusted across the board, but a lot of the super steals are leftovers that carry baggage: bad lot, damage, etc. 

Remember that you have to live there after the thrill of the deal is gone.  Keep your priorities in order: location, neighborhood, house, deal.