Palm Beach County housing showing ‘green shoots’?

It’s all over the news…The housing crisis is over! In todays Palm Beach Post is this headline: Florida home prices bottomed earlier than previously thought, according to one study…and the article goes on to state that they just realized that the bottom was in 2009!

The bottom has been reached and it’s all up from here…Green shoots are everywhere!

Not so fast…There’s a good chance those green shoots will get swamped by the coming wave of distressed home sales!

I have been following (and charting…see below) the number of Lis Pendens filed with the Palm Beach County Clerk since 2010.

Here’s another tidbit from a recent Sun Sentinel article: It takes an average of 861 days for a lender to repossess a property in Florida, says RealtyTrac Inc., a California foreclosure listing firm.

Lenders are whole heartedly resuming foreclosures following the “robosigning” scandal in which bank employees admitted using faulty paperwork and fake signatures to take back homes.

Prices have rebounded in South Florida and across the state in recent months. But those gains could easily reverse when the coming wave of foreclosures hits the market.

As we all know by now, bank-owned homes and short sales typically sell for less than a similar home would sell for if not a distressed sale, thereby hurting the values of nearby properties…and specifically creating potential for nightmare scenarios with the  appraisals of non-distress-sale homes.

All the recent news stories are reporting that prices are on the upswing and have benefited from a change in the mix of homes sold with distressed properties – bank-owned homes and short sales -- accounting for only 22% of total sales, down from 31% last August.

Below is a graph of the median home price index charting back to January 2008. You’ll see, even with all of the excitement in the media the past few months, that we’re still below summer of 2009 prices. And all the the bumps in prices…they are ALL the summer buying season.

In Quarter one of 2013, when they are charting median sales prices for Oct-Nov-Dec 2012, what do you think the graph will look like?

So, to wrap up this cheery post…my take on all of the recent reports by the experts. They are wrong, period.

If  there have been over 10,000 foreclosure actions started so far in 2012, and a total of over 22,000 in the past 20 months and it takes, on average, over 800 days from start to finish, it looks like we are clearly in for a very large number of distressed sales…either as short sales or bank-owned sales.

As of today, there are 11,910 properties listed for sale in Palm Beach County in our MLS system…single family/townhomes and condos. Almost exactly TWICE AS MANY properties have had a foreclosure action initiated since 1/11 than are currently for sale!

Just for fun, lets say that 50% of those in foreclosure somehow resolve the foreclosure. That still leaves over 11,000 short sales or bank-owned homes going to hit the market in the not-to-distant future…and that is just the stats if they stop filing foreclosures today! (which is not going to happen)

The short sales may hit the market sooner, unless the owners are trying to stay as long as possible. But there is no doubt that there will be new downward pressure coming.

For about 6 months now I have been counseling my customers and clients that we are in a ‘mini-bubble’ that may last a few months longer. If you have equity…now may be your best chance for a while to sell.

As always, thank for reading…Steve Jackson…561.602.1258

If you have any comments on this post, or would like to suggest a post topic…send me a text or an email.

If we don’t sell it…we’ll buy it!

Once again, I have started to see this being promoted recently by mail, in the Neighborhood News and on the radio.

"If we don't sell your house in___days...WE'LL BUY IT!"

Sounds great...especially in this market. Worth checking out? That's what the agent is hoping you'll think. Get the agents phone to ring...but they'll never discuss the details over the phone..."much to complicated and need to see your home to see if it qualifies"...get the foot in the door. But there is NEVER a free lunch; there is always a cost associated.

But, particularly in this type of market, it would be "good business" if the agent NEVER bought any homes, or if they did, that they were purchased at such a drastic discount that the could quickly ‘flip’ the home and make some money. 

I have gone to several seminars where they promoted this (tactic/gimmick) and the dialog you will hear starts out something like this: " Mr./Mrs. homeowner, a big dilemma when making your move is deciding whether to buy 1st or sell 1st. Either way is risky as you could end up with 2 homes (or no home). Our unique/innovative/etc Guaranteed Sale Program solves this dilemma...you get our personal guarantee that if we don't sell your home in BLANK (30/60/90/120) days, we will buy it at a price acceptable to you. Now, WE take all the risk from you and you can immediately place a confident offer on another home". The Devil? it’s in the details:The hidden details usually follow some or all of these general guidelines:

• Must purchase one of the agents listings...or at least buy a 'full commission' home with them
• Seller must still pay a full commission on the 'guaranteed' sale
• Quite often an 'upfront' fee or guaranteed sale program fee of anywhere from $295 to fees in the thousands
• "Agreed upon" price well below appraisal/market value...could be as low as the 80% range, then subtract commissions, fees, closing costs etc.
• Original list price 5% below  sale prices of comparable homes
• May be a an additional fee involved
• Seller may be required to continually lower the asking price during the guarantee period...for example: 100%  for 1st 30 days, 95% day 30-60, 90% day 60-90, and so on until the “buy-out price is reached.
• Sign the listing agreement first...then the guaranteed purchase details come later
• There may be a maximum allowable program price
• Restrictions on home condition
• Use the language "I'll buy it for 'list' price", but fail to say that the 'list' price is the 80% ENDING list price

Now if they'll come right in and buy it for the price that they agree to list it for...

then that's putting their money where their dog and pony show is!

Think about these few points:

• With as difficult as it is to get a mortgage now, COULD your agent actually perform on their guarantee? And what will happen if they CAN’T perform? Ask to speak with their mortgage lender...do your due diligence as with any other buyer.
• If they don't need a mortgage and have a few million sitting around to buy homes that don't sell in 90 days, why are they a real estate agent?
• Are they "flipping" the purchase option to an investor? Are they going to list the home for the investor once they buy it?
• Can they assign the guaranteed sale price (as in a wholesaler)?

Good, solid, cutting-edge marketing, a detailed understanding of the local and national economic factors affecting home values, subdivision level market knowledge, ability to analyze trends...trust and mutual respect...THIS is what is needed today. Not MORE GIMMICKS!

Thanks for reading…Steve Jackson

561.602.1258

 

9/11/01

 

Palm Beach County Property Tax notices are out…was your home valued too high?

A few weeks ago the Palm Beach County Property Appraiser sent out the estimated property tax notices to every property owner which contained assessed and market values of the property.

This notice is not a tax bill. The Tax Collector’s Office will mail tax bills on Nov. 1. The Notice of Proposed Taxes is intended to give you an idea of what to expect when the taxing authorities work up their budgets for the 2013 fiscal year (Oct. 1, 2012-Sept. 30, 2013).

The value information shows your property’s market value for 2011 and 2012. Market value is based on the most probable sale price a willing buyer would pay in a competitive market. The 2012 tax roll is based on sales transactions that occurred in 2011.

If you believe the market value (and resulting property taxes) of your property is too high you have the right to appeal...BUT YOUR TIME IS RUNNING OUT! September 17th is the appeal deadline.

The procedure for a valuation appeal is as follows:

1. You can all the PB County Property Appraisers office and speak with a deputy appraiser. The main contact # is 561-355-3230, the # listed under Residential Appraisals is 561-355-2883. If still dissatisfied, you can then appeal to the Value Adjustment Board, an independent body consisting of two County Commissioners, one School Board member and two members at large, appointed by the County Commission and School Board.
2. The Value Adjust Board appeal: The VAB is set up to settle disputes between taxpayers and the Property Appraisers office. You can file your petition online HERE…but you only have until SEPTEMBER 17th…so don’t delay! Filing a petition will cost you a non-refundable $15 fee. HERE is what the actual petition form looks like.You can also file in person at the Clerk Governmental Center 1st floor office or any branch location. You can call the VAB at (561) 355-6289.

In hearings before the VAB you may represent yourself, seek assistance from a family member or a friend, or have an attorney or agent represent you.

It is recommended that you have evidence to support your petition. You can review the Florida Department of Revenue Web site for examples of evidence listed in Florida Statute 193. I am of the opinion that recent arms length transaction sales of similar properties can be the best evidence of value a homeowner can have. The county appraiser might compare your property with similar, recently sold properties to determine its market value, then multiply that by a set fraction, known as the assessment ratio. So if a property's market value is determined to be $100,000 and the assessment ratio is 80%, the assessed value for property tax purposes should be $80,000.

The next step is to check for errors in your assessment. Your local assessor's office can provide your property's record card which has information used to assess your property, such as dimensions and number of rooms; you can check that out HERE. Check that the square footage listed is correct for both the house and the land. If you find an outright error -- for example, the card says your home is 2500 sq. feet but in reality it is only 2000 sq. feet -- you may be able to show the assessor your blueprints or floor plan to get a reduction and skip the formal appeal.

Next, investigate the assessed value of similar properties in your neighborhood to see how yours compares. Look at property cards for homes of similar age and square footage with the same number of bedrooms and bathrooms. If you find that your assessed value is considerably higher than that of at least five homes (the more you can document, the better), you may have a solid case for appeal. Try to find comparable properties that are as close as possible to your own -- nearly the same square footage, in the same neighborhood, and with similar grades of construction materials.

Another option is hiring a professional real estate appraiser who will take a thorough look at your property provides the strongest evidence of its worth, but check whether your community allows outside appraisals in an appeal before you get one. If you go this route, find someone with national certification, such as through the Appraisal Institute or the National Association of Independent Fee Appraisers. Several factors contribute to the cost of an appraisal, but expect to pay about $250 to $500.

Also, if you’re friendly with a ‘competent’ real estate agent who is an expert in your area, they can provide you with a great deal of valuable information regarding the value of your home.

Lastly, there may be attorneys or other private companies that assist homeowners in challenging their tax assessment…I , however, have no experience with either and can provide no recommendations. I googled for tax assessment challenge companies and came across this one (no endorsement) And I found this book published by The National Taxpayers Union that may be of some help…(I’ve not read it and it costs $9.95)

There are specific evidence submission requirements plus you must bring all of your evidence to the hearing and be prepared to present it. When sending your evidence to the Property Appraiser, please provide two (2) copies. Do not submit evidence to the VAB clerk.

Here is a link where you can download the 2 page VAB guideline brochure.

Evidence sent before the hearing as part of the pre-hearing evidence exchange with the property appraiser should be sent to:

Property Appraiser
Governmental Center
301 North Olive Avenue
5th Floor
West Palm Beach, FL 33401

Good luck in your appeal!

Thanks for reading…Steve Jackson

561.602.1258