About Oviedo's Live Oak Reserve

If you haven’t noticed, there’s been a revolution going on.

Some of you would say, “How could you not notice?”

And yet, a new model of real estate snuck up on most of us. It started with a small band of rebels, the ones who threw away the old, tired rules and instituted fresh new ones. The rest of us stood by and watched, some of us in horror, some of us in awe, most of us hoping the rebellion would be short-lived, that soon we could return to the old model and the old way of doing things. But the rebels’ voices became louder and more strident.

They called it ‘The Short Sale Revolution’

Ultimately, we couldn’t do anything but notice.

To notice, though, is not to accept. First, we had to go through the 5 Stages of Grief.

1. Denial
2. Anger
3. Bargaining
4. Depression
5. Acceptance

At first, we entered a state of denial. This can’t be happening, we said to ourselves. And even if it is, it won’t last long.

Then we got angry ... good and angry. At the banks, at Wall Street, at Washington, at buyers, at sellers ... at the unfairness of it all. Why me? we whined. Why real estate? Why my profession? Why now?

Then we bargained for the old ways, stuck to our business models, and dug in our heels. Wishing and hoping all the while for everything to return to the way things used to be.

Towards the end, we became depressed, wondering if anything would ever be the same again. We experienced feelings of hopelessness and frustration. We mourned the loss of business and the putting off of dreams. We felt a lack of control and were confused about what to do next. Sometimes we cried. Other times we yelled and shook our fists at the sky.

Finally, realizing change was here to stay, we accepted the truth, and more importantly, understood it wasn’t our fault. We began to look for solutions. We started revising our business plans, throwing out what didn’t work, and trying new ways. During the process, we adapted to the way things are and not the way we wished them to be. We also learned that this is an ongoing process. If ‘this’ doesn’t work, maybe ‘that’ will. The learning curve is steep. The rules change constantly. We have to adapt every minute, every hour, every day. And we have to remember that we’re not only reinventing our business but reinventing ourselves.

What happens when foreclosures and short sales work their way out of the system ... one year, two years, three years from now? What then? Will all our hard work be wasted? Not in the least. Because we will have survived and become stronger for it. And we’ll be better at what we do.

It’s the dawn of a new era. Welcome it. Embrace it. Spit in its eye when you feel the urge. But keep on ‘keeping on’. The real estate market is here to stay, and so are we.

Here in Orlando, summer is perpetual, the sky is nearly always clear and blue, and the foliage is emerald-green year-round.

Warning: Don’t be fooled by Florida’s weather, its lush landscape, or its tropical breezes.

You see, the geographical forces that shaped Florida—this ‘feast of flowers’—also surrounded it with water: the Atlantic Ocean on our eastern shores and the Gulf of Mexico on our western shores.

When it comes to venturing into these waters, swimmers must watch out for riptides and keep a sharp eye out for sharks.

For that reason, viewing our paradise through the polarized lens of a digital camera without peering beneath its deep, deep waters can often prove deceptive.

On a similar note, when it comes to buying and selling real estate in Florida, the same cautions apply.

Though Florida’s land sharks are of a different species than its watery brothers and sisters, they are no less dangerous. And I’m wondering which of those sharks are responsible for the housing crisis facing us all.

Shark #1—Buyers. We begin with buyers because ... well, because we have to start somewhere. Not necessarily today’s buyers but the buyers of 2005, 2006, and 2007. Those buyers who thought the real estate market had nowhere to go but up-up-up. Believed a house wasn’t a place in which to live so much as a commodity to speculate in, to trade, to flip. Buyers who put no money down. Who counted on appreciating values being with us forever. And many who were convinced they could actually buy something for nothing. Okay, nothing except a promise and a signature. Which brings us to ...

Shark #2—Mortgage Lenders. Subprime loans, teaser rates, ARMS, Alt-A loans. Sure, come on in, they hawked to the many buyers passing by. The water’s fine. Money is flowing from the spigot, and there’s nothing to clog up the faucet. Which points a finger at ...

Shark #3—Wall Street. Free-market economy, deregulation, mortgage-backed securities, bonds, derivatives, hedge funds, Fannie Mae, Freddie Mac—all the elements came together to form the perfect storm. And nearly sunk the ship. The survivors—homeowners—are floating on the ocean without a life raft and scrabbling for the few life preservers being thrown into the waters by Congress and the Fed.

Shark #4—Real Estate Agents. There’s a new game in town. Old rules don’t apply. Agents who take on pre-foreclosure/short sale listings must find some way to sell houses in neighborhoods filled with dozens of other houses that aren’t selling, either. The best way to do that is to set prices as low as possible. To appeal directly to the buyer who wants something for nothing. But at what cost?

Because the lower the list price, the more the market slides, and down and down it goes. Until it’s a self-fulfilling prophecy. Until we lose sight of which came first—the chicken or the egg ... market value or the promise of a bargain in a sea of bargains.

Shark #5—Sellers. Under ordinary circumstances, sellers would balk at the notion of setting a price so low that all equity is lost. Now, in this depreciating market, equity has already evaporated in a cloud of mist, not just for pre-foreclosure homes but for every house out there. Sellers have to survive somehow, and to survive means to avoid foreclosure. So why should sellers care about the listing or sale price of their ‘Home, Sweet, Home’ anyway? Equity gone. House gone. Future unsure. Hey, get rid of the darned thing. The quicker, the better. Which brings us to —

Shark #6—Greedy Buyers. Greedy Buyers are different from the Old-Fashioned Buyers of just a few years back. They can smell blood. A low-ball list price isn’t low enough. Low-balling the low-ball isn’t just a trend. It’s business. Greed is the new hallmark. The market value of today is blown out of the water by dawn tomorrow. A new benchmark is set with the next sale. And the market continues its downward spiral. Which brings us back to —

Shark #7—Mortgage Lenders Revised: Not today’s lenders trying to eke out loans one house at a time, applying stricter rules and higher standards. No, the mortgage lenders of record. The ones holding a bag full of excrement smelling up the balance sheet. The beleaguered loss mitigation departments unprepared for the sheer volume.

Because it isn’t just bad loans they have to work out of the system. It’s loans held by people who were unlucky enough to purchase within the last five years. Transferees and relos. People getting divorced. People laid-off. People facing medical bills. All kinds of people. Responsible people who did everything the right way and counted on appreciating value instead of a crashing market.

When the loss mitigators finally get around to approving that short sale contract signed off by a seller and a buyer, market value has lost even more ground. In the meantime, they’ve ordered a BPO (Broker Price Opinion) or an appraisal. The file has been transferred from one desk to the next. After a month or two, and faced with the prospect of foreclosure, they have to make a decision. They didn’t set the listing price and they weren’t involved in negotiating the contract price. Since a deal is on the table, they have to think twice, maybe three times. So after more meetings and more paper shuffling, they accept the lowball offer because it’s the best ... and only ... offer on the table.

Which brings us back to the original question —

Exactly Who’s Responsible for the Sudden, Swift, and Deep Depreciation of Florida’s #1 Asset?

All of us, because we’re all in the same boat together, sink or swim.

Builders are hurting the resale market

In the Orlando area we are starting to see builders hurting the resales in their neighborhood. We tell clients all the time NOT TO BUY IN A HUGE COMMUNITY unless they are going to stay beyond the time the builder will finish. Future buyers usually would prefer a new home and with the builders paying all the closing costs and pre-pays, it's hard to compete wit them.

Builders are also building less expensive models with more options for less money. BUYERS NEED TO CONSULT A LOCAL REALTOR TO BE A WELL INFORMED CONSUMER. Also, a REALTOR should be able to get you a better deal from a builder or at least will get you as good of a deal and they will make sure you are represented.

Richard Shuman P.A. Florida Relocation Team

www.FloridaRelocationTeam.com

The statistics shown below indicate how fast ... or s-l-o-w ... houses are selling in your area.

If you have to sell your house, you must take into account your community’s Absorption Rate. The concept is easy to understand once you understand the formula.

First, you must know how many homes sold over the last year.

Then you must determine the Absorption Rate, or average number of homes that have sold on a monthly basis.

From the Absorption Rate, you can easily estimate how fast the current inventory of available homes will sell.

The larger the current inventory—or ‘active listings’—the longer it will take any one home to sell.

If there are twice as many active listings available for sale than the current absorption rate, it will take twice the amount of time, or 2 months, to sell out current inventory, provided no new homes enter the market.

If there are three times as many active listings for sale than the current absorption rate, it will take three times the amount of time, or 3 months, to sell out current inventory.

The longer it takes for the current inventory to deplete, the more necessary it becomes for sellers to price their house in a strong competitive position versus all the other houses currently for sale.

It follows that the lower the price, the faster the sale.

If you’re a homeowner looking to sell your house in 2009, remember this: ‘Denial’ isn’t a river in Egypt. Denial is clinging to the notion that you can sell your house for more money than a buyer in today’s market is willingly to pay.

This is where a knowledgeable real estate agent becomes more important than ever, because the more familiar your agent is with the fluctuations of the current marketplace, the quicker you’re likely to sell your house. And in this unsure market, that means putting more money into your pocket.

As real estate professionals, we harbor high expectations of our customers. We put them on a pedestal and think of them as practical individuals who rely on objective reasoning powers when it comes to their financial futures. Sure, we’re there to give them advice, to inform them on the status of the real estate marketplace, and to guide them toward closing day, but still, we rely on them to make informed decisions based on detachment and logic.

But of course, buyers and sellers are not like that. Uh-uh. They're just like us. They fear, they hope, they dream, and they make decisions based on gut feelings, intuition, chance remarks, daily horoscopes, and lucky pennies. They look for signs that tell them whether danger ... or safety ... lay ahead.

A 2005 research poll of more than 2,000 people conducted in England showed that almost 25% of first-time buyers put plans to buy on hold until after the general election while 24% of existing homeowners planned to hold out for their full asking price, even though indicators showed downward price pressures.

The overall expectation from these results was that buyers and sellers would be able to take a more informed view of the housing market after the election and make decisions accordingly.

Republican or Democrat ... McCain or Obama supporter ... red state or blue state ... it doesn’t matter who we are or what side of the political divide we're on. When it comes down to basics, we all need certainty.

On the eve of this seminal 2008 election, the future of America and its economic trials and tribulations are anything but certain. But by putting the election behind us, no matter how the electoral votes come out or who is declared the winner, at least then we’ll know, or think we know, what the future holds for our country, and by extrapolation, ourselves.

During its 4^th quarter Web conference, the HomeGain Advisors Group—made up of real estate agents and brokers from across the country—concluded that the stagnant tenor of our real estate market won’t change until after the 2008 presidential election.

Further, its members concluded that it probably won’t matter, one way or another, which way the election goes. Simply, the election causes uncertainty in the market, and buyers and sellers are waiting to see what will happen after the election, and not only after the election, but after the New Year.

Due to the worldwide financial meltdown and the stock market collapse, the sense is that buyers and sellers are sitting on the sidelines. As one member put it: “The mindset is 2009 is going to be better!”

What’s that? What did you say?

You’re right. Be it a McCain win or an Obama presidency, buyers and sellers still won’t be able to divine the future. But at least they’ll know who will occupy the Oval Office for the next 4 years, and based on that, come to certain conclusions. And to them ... and us ... that’s certainty.

Even better, the airwaves won’t be dominated by talking heads and verbose pundits, or overridden with political ads and mind-twisting rhetoric. That alone will bring us a modicum of peace.

And because of the relative quietude, we’ll be able to think. About our futures. About our families, our lives, our financial futures, and our hopes for a better 2009.

So don’t be surprised if, after the election and gearing up through the New Year, buyers and sellers suddenly start calling, saying in succinct words and pent-up enthusiasm, “I want to buy! I want to sell! It’s time to get on with my life!”