Coastal Florida Real Estate

Broward County plans to begin online foreclosure sales by March. Miami-Dade County started using them earlier this month.

The move is meant to save time and money as counties deal with budget cuts and a mountain of mortgage defaults. Palm Beach County says it has more than 53,000 pending foreclosure cases.

"The efficiencies we realize, I think, will be enormous," said Mark Broderick, director of civil court services for Palm Beach County Clerk & Comptroller Sharon Bock.

As allowed under Florida law, the county will charge a new $60 fee to each winning bidder to cover the cost of automating the auctions.

Bock's staff ran its last live auction Tuesday. It had conducted two or three in-person sales a week, selling 80 to 150 properties at each one.

The online auctions will increase sales and open the bidding to a deeper pool of potential buyers who no longer have to drive to the courthouse, proponents say.

"The hope is that more of these properties will be bought by investors as opposed to going back to the banks," said Ian Yorty, director of Florida business development for Grant Street Group, a Pittsburgh-based company that will operate the online auctions for Palm Beach County.

Moving the auctions to the Internet also eliminates unfair advantages, said Lloyd McClendon, president of RealAuctions.com, the Plantation-based company that will run Broward's online sales.

At courthouse auctions, "the same bidders are in the room over and over and over again," he said. "They give false information to novice bidders, all in an attempt to prevent them from getting in on their auction."

Experienced bidders "who have been doing it the old-fashioned way will, over time, realize it's a convenience to them," Yorty said.

Jupiter investor Bill Allen said he's disappointed by the move online because he became friendly with a dozen or so regular bidders. "We'll all miss the camaraderie, but we'll make the best of it," he said.

Florida is the first state in the nation to use online foreclosure sales. In 2008, the state legislature changed the law to allow for the auctions.

To prevent "sniping," in which buyers submit last-second bids in an attempt to win a particular property, Palm Beach County's online auctions will be extended when a high bid is made with less than a minute left. In Broward County, the auctions will be extended when the high bid comes in with less than 30 seconds to go.

Recently, I had the opportunity to speak with the owner of a large home in Tequesta ($ 1,000,000+) regarding selling his home.

We met twice for nearly 2 hours total and the discussion centered on the pricing, not on the "marketing" which is usually the case.

This seller had spent a career on Wall Street and so he was very aware that numbers don't lie and that the market is....well exactly what buyers who are not under duress will pay.  Unfortunately, in the stock & bond market you can get an instant quote on securities you might want to sell.  In the housing market you don't have this option.  This is why dynamic market positioning is so important.

He had purchased the house in spring of 2006, which was exactly the top of the market here.  He agreed to this and that the market had declined certainly more than 20% since he bought.  but he would not surrender to the facts that his house is worth less than he paid for it.

And, he has been trying to sell the house at more than he paid for it for over 500 days!  The average time for a house to be on the market in Palm Beach County is 150 days and 130 for Jupiter.

Anyway, to get on with the story he had narrowed his search down to me and one other agent (the agent who had the property improperly priced for the last 500 days).  He chose the other agent and listed the house at 97% of his purchase price.

Sure, I would like to have had the listing.  But at this price, its not a listing its just a home where a seller is expecting a miracle.  And you can bet that every time the phone rings and the agent sees his name on the ID, the agent will wonder what to say to him this time.

So much inventory could be moved if sellers were realistic and agents had the confidence to do the right thing and price the property correctly.

I have learned that you never get a second call from a seller even when the house doesn't sell.  I think their pride keeps them from making that call.

So much for right now.  Don't forget Florida sales are up for the 16th month and interest rates are low.  If you are thinking about selling, "Git 'er done".

Here's the update.  On April 9, the house sits unsold for another 126 days and at the same price.  If you don't think I'm right, go read my post called, "Case Study # 19, Catching a falling knife".

Tighter lending requirements for loans insured by the Federal Housing Administration may leave some borrowers unable to get mortgages, but economists are divided on the impact they could have on housing’s recovery.

The changes, aimed at strengthening the FHA’s reserves in the face of rising foreclosures, shouldn’t hurt too many borrowers, officials say.

The FHA is playing a greater role in the mortgage market, insuring about 30 percent of new loans, up from 3 percent in 2007. Growing defaults have cut its reserves below the level mandated by Congress, leading to fears that it might need a taxpayer bailout.

FHA-insured mortgages are attractive to borrowers, however, because down payments are only 3.5 percent. That won’t change under the new policies the FHA announced Wednesday, which are to take effect in spring or early summer. Among them:

• New borrowers will have to have a minimum credit score of 580 to qualify for a 3.5 percent down payment. Those with lower scores will have to make at least a 10 percent down payment. The average credit score of FHA-insured borrowers is 693.

• Allowable seller concessions will be reduced from 6 percent to 3 percent of the sale price. The change is intended to discourage inflated appraisals.

• Buyers will have to pay an upfront mortgage insurance premium of 2.25 percent of the total loan amount, up from 1.75 percent now. A $150,000 mortgage would require a payment of $3,375, or $750 more.

“It will slow the growth in demand,” says Joel Naroff, of Naroff Economic Advisors. “Any time you put up roadblocks, fewer people will qualify. This is just the beginning of clearer and more specific requirements so we don’t get into the mess we got into again. In the short term, it will have an effect, but it won’t be a huge effect.”

Dean Baker, co-director of the Center for Economic and Policy Research, says he expects the new FHA requirements will have a significant impact on borrowers, especially first-time homebuyers. Those who are denied FHA-insured loans, he says, are usually unable to qualify elsewhere.

“It’s a big deal,” Baker says. “Some will be unable to get loans. This will have a big hit on the market.”

Baker says it’s not surprising that FHA needed to take such steps, because it’s risky for lenders to issue loans with 3.5 percent down during a time of declining home values and rising unemployment.

While the stiffer requirements may leave some borrowers out of the marketplace, some economists say the measures are necessary to protect the FHA from losses.

Lawrence Yun, chief economist at the National Association of Realtors, says very lax lending and FHA insolvency could hurt the housing market worse in the future.

He says he doesn’t believe the requirements will stall the housing market in light of current low interest rates and a federal tax credit for first-time and repeat home buyers.

Mark Zandi, of Moody’s Economy.com, agrees the changes won’t have significant impact.

“It does highlight more broadly that policy support for the market is starting to wane. The tax credit will end in April; now, the FHA rule changes,” he says. “Policymakers are slowly exiting from their unprecedented support of the housing market to see if it can function on its own.”

A record 2.8 million households were threatened with foreclosure last year, and that number is expected to rise this year as more unemployed and cash-strapped homeowners fall behind on their mortgages.

The number of households that received a foreclosure-related notice rose 21 percent from 2008, RealtyTrac Inc. reported Thursday. One in 45 homes were sent a filing, which includes default notices, scheduled foreclosure auctions and bank repossessions.

In December, more than 349,000 households, or one in 366 homes, were hit with a foreclosure-related notice. That represents a 14 percent spike from November and a 15 percent jump from December 2008.

Banks repossessed more than 92,000 homes, up 19 percent from November. That increase was likely due to lenders working to clear their books at the end of the year, RealtyTrac said.

The foreclosure crisis isn’t letting up. Between 3 and 3.5 million homes are expected to enter some phase of foreclosure this year.  Economic issues, such as unemployment or reduced income, are expected to be the main catalysts for foreclosures this year. Homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.

The same three states that led the nation in foreclosure rate in December also posted the highest rates for the entire year: Nevada, Arizona and Florida. More than 10 percent of Nevada housing units received at least one foreclosure filing in 2009, with Florida and Arizona following with about 6 percent each.

The other states ranked in the top 10 for the year were California, Utah, Idaho, Georgia, Michigan, Illinois and Colorado.

If there’s one industry that’s not feeling the economy’s sting these days, it’s the business of filing foreclosure lawsuits.

Recently, mortgage-servicing companies have been filing about 2,000 initial foreclosure documents every month in Hillsborough County Circuit Court. To handle the overwhelming caseload, armies of lawyers, paralegals and clerks at big foreclosure law firms have streamlined the art of separating homeowners from their homes.

Few are as large or as efficient as Tampa-based Florida Default Law Group, which processes at least 300 new foreclosure suits a month in Hillsborough County, court documents show.

By forging relationships with mortgage companies and focusing on volume, Florida Default Law Group offers to foreclose on a home at the bare-bones price of $1,200, about half the typical cost.

Dubbed foreclosure mills by some in the industry, these companies have turned the job into a factory-like process. Speed is the key to their success.  “The only way their business model works is if they don’t lay eyes on the lawsuit,” said Jim Kowalski, a Jacksonville lawyer who has litigated against Florida Default Law Group.

To handle the workload, foreclosure mills have developed a common model: use lower-paid paralegals and support staff for much of the routine legwork, and hire young lawyers to sign off on the lawsuits and handle complications.

Its clients aren’t banks, which long ago pooled their mortgages into securities and sold them to investors. Instead, Florida Default’s clients are the mortgage servicing companies that collect monthly mortgage payments from homeowners and, when necessary, foreclose on them. Often, major banks own the mortgage servicers.

Why these companies like dealing with mills is simple: With their efficient structures, they can underbid other law firms on foreclosures, which otherwise might cost thousands of dollars apiece.

“It’s machinery,” said Hakanson, who practices real estate and bankruptcy law with a different firm in the Bay area. “We thought it was huge (in the 1990s) when we got 200 files a month, and now these firms are doing 1,000 or 1,500 a month.”

Attorneys who defend homeowners against foreclosures say they have trouble contacting Florida Default lawyers.

“They’re just extremely nonresponsive in the bankruptcy arena,” said Patrick Smith, a Tampa bankruptcy lawyer who occasionally deals with Florida Default. “I don’t think they’re structured to put too much time into any one case.”

Here in Palm Beach county, much like other counties in Florida, the County has gone to an eBay like system to dispose of the high number of forclosures.  Currently, we are collecting them at the rate of about 2,500 per month.

Visit my You Tube channel for my 2009 Year End Real Estate Market Summary at:

http://www.youtube.com/watch?v=s1UZemI3jQE

This is the case study of Jim and the many others like him...short sale victims who don't know they are short and who can't be counted in the statistics and is based on a true story.

Quite a few years ago, before the big run up in home prices, Jim bought a home in Jupiter Farms.

It is a modest home and he paid a reasonable price for it.  But, like others, when home prices went up he decided to refinance and buy a Porsche.  Everything was still OK.

Several years went by and Jim met a woman.  They decided to marry.  Once married, they moved into her house and so Jim decided to sell.  To his surprise, he found he was now facing a short sale.  That is, a deficiency in the amount he owed vs. what his home might bring on the market.

I've been calling this the skeleton in the closet.  People like Jim can't be counted in troubled loans simply because they aren't in trouble...yet.  All that is takes is a change in their circumstances to push them into the troubled loan arena. 

Jim may still sell.  If the lender agrees to the shortfall from the sale, he may walk away with a promissory note for the deficiency.  And a Porsche.

Up until yesterday, we've had the top down and considered turning the A/C back on.

That all changed yesteday.  A cold front came through late in the day bringing with it some showers, clearer skies and wind right from the north.

Temperatures dipped into the 40's last night and are expected to be the lowest of the season tonight plunging into the los 30's inland with a chance of frost.

If you are reading this in North Dakota, I know it sounds like spring weather.  But for us, its really cold.

On Monday, I will be posting my 2009 Jupiter Real Estate year end wrap up so be sure and check back!  I'll start on Jupiter Island (with Tiger Woods) and end up in North Palm Beach (with Tiger Woods yacht).  In between, we'll cover single family homes, oceanfront condos, western communities and our exclusive club communities like Admirals Cove.

If you trying to sell here in Jupiter or Tequesta and need a market analysis of your specific community, send me an email inquiry : rsites@coastalfloridarealestate.net

So here we are in 2010 and a Happy New Year to all of you!

Jupiter, Tequesta and Coastal South Florida have always been and will continue to be fabulous places to live.  We have a mild climate, abundant natural beauty, miles of beaches, clear warm water, low crime, good schools and no blighted inner cities.  You can choose any lifestyle that suits you here:

Multi-million dollar condos directly on the ocean on Singer Island. Or smaller oceanfront condos on Singer Island, Jupiter Island or Ocean Trail in Jupiter.

Waterfront homes directly on the ocean in communities like Lost Tree Village, Seminole or Jupiter Island.

Waterfront homes on the Intracoastal Waterway in communities like Admirals Cove, Jonathan's Landing and Frenchman's Creek.  Or others along the Intracoastal that are not in gated communities.

Riverfront homes with ocean access in Jupiter and Tequesta.

Exclusive club communities like The Ritz-Carlton and The Bear's Club.

Other exclusive clubs like Frenchman's Reserve, BallenIsles, Old Palm, Mirasol and Old Marsh.

Every home size and style imaginable in PGA National and Abacoa.

Equestrian lifestyles in our western communities like Jupiter Farms, Trailwood, Old Trail, Tailwinds, Ranch Colony and The Links on home sites from 1.25 acres to over 20 acres.

Mid-level communities in Jupiter like Egret Landing, The Shores of Jupiter, Maplewood, The Colony, Abacoa, Ocean Walk, Botanica, Clocktower Hammock, Pennock Point, Mystic Cove, Palm Cove, North Fork and Cypress Cove.

People will always need to buy and sell and it does not snow here.  Stage your home right, price it right and it will sell.

Interest rates are at historic lows and you can sell you house quickly.  I sold one this summer in Jupiter in just 17 days.

Interest rates are at historic lows and with good credit you can buy a house quickly.

The short sale has gained notoriety but is really a headache and a frustrating experience.  And even when successful takes away the thrill of buying a new home.  But, there are millions of hidden short sales that cannot be counted yet and are waiting to come on the market as the seller's circumstances change.

Counties in Florida have now automated the foreclosure auction process to deal with the huge numbers of homes.

The strategic default is now poisoning the market.  We will certainly see more of this. 

The print media will continue to decline as the Google led charge onto the Internet continues.

Due to the economy, foreclosures are being stripped of anything of value.

Flippers are moving back into the economy buying up foreclosures.  In Port St. Lucie there a 3 year old homes of 2600-3000 square feet, never lived in, selling for just over $ 100,000.

This is a great time to buy a home if you are looking for value.

This is a great time to sell a house if you are serious.

All the best in 2010!