Cathy Melton

Hurray! Our numbers from our local Association came out today with great news. Our resale inventory is down 6% from year ago. There was a decrease of new listings by 1.8%. Closed sales went up 37% from one year ago.

Congratulations to the hard working Realtors who have managed to stay on top of the market and staying positive for their clients. We are in a tough market and this just shows how important it is to keep a positive attitude. No matter what the news media wants the world to know, our Central Florida numbers are far better than what the media is reporting.

I can hardly turn away from the television. It is a combination of horror, mystery and drama. The financial markets are in a free fall and the growing concern over the economy is everyones headlines. How will this affect the real estate market? I can pretty much guarantee that the values will continue to decrease; how rapidly is the question now.

We just closed on a property that was two months from going into foreclosure. We were able to sell the house for our client with them only bringing a few hundred dollars to the table. They called me today with the realization that they were truly lucky to have sold their home when they did. For the first time in several months, they were finally able to breathe a huge sigh of relief. I wish I could say this for other For Sale homeowners who are absorbed in the news media. I can hear it in their voices when they call for buyer feedback.

The stresses of our market is taking its toll on Realtors as well. A psychology degree should be a requirement from our Association. Not just for our Sellers, but also for ourselves. It is very disheartening to see our clients in agony during economic hardship. Families are losing their homes and hoping that the bail out proposal will somehow save them. Too few buyers have the ability to purchase.

Real estate is regional for the most part, but the economic turmoil is nation wide.

The original question of can you predict the market? Here in Florida and especially in Celebration where values are slightly higher than the surrounding communities, homeowners should prepare themselves for additional declining home values.

Should we or shouldn't we? That's the question. This past week has been very trying for one of our agents. She began working with this wonderful buyer couple, with cash to close as soon as they find the "perfect" home. 200+ homes and 4 tanks of gas later, the buyer couple can't seem to find that "perfect" home. From Osceola County, to Orange County, to Polk County; the houses are either too small or too large, too old or too new, no view of water, too little view of water, prices are too high...you name it, the "perfect" house is just not there.

Bottom line, there is just too much inventory out there. Buyers cannot make up their minds. Purchasing a home has always been an emotional decision for many people, but when the market is overloaded with possibilities, the decisions become near impossible to make.

The original question is: Should we or shouldn't we? Should we, in this poor economic environment, begin charging clients for our time (and gas) to drive them around day after day? I would be very interested to hear how others have dealt with this issue? Would offering a refund at the time of closing (monies buyers pay for your time) be a viable option?

I would really appreciate everyones input.

Well, we have been very busy working with Buyers. We have 7 closings over the next few weeks; which is very good. The buyers who have been waiting for the "bottom" are now beginning to realize the bottom is close enough to make their moves. The market is still negotiable, but not as negotiable as one would think. Many Sellers are realizing the importance of listing their properties for sale at a Fair Market Value - this means they are realizing that a house that is priced to sell - will sell.

Another feature our Sellers are realizing too is that they have to pack up the clutter and have their homes in show-ready condition. They realize that investing a small dollar amount towards landscaping, sprucing up the front door and basic good old fashioned deep down cleaning will provide a quicker sale for the most money.

The market itself is still below "normal" levels, but the regional activity has increased. Single family homes are selling on average between $200/sf - $250s/f. There are exceptions of course: short sales, foreclosures and other properties that provide that something special that a buyer is willing to pay more for, such as custom built-ins, tropical pools, newly upgraded quality kitchen, or lavish outdoor living space.

We see a decline in "Investor" properties; buyers that have a short term committment to the property. We also have seen a departure of "flippers". On the increase are companies that seek desperate homeowners looking to sell their home in a short sale environment. See my previous BLOG about these type of people/companies. BEWARE!

Over-all, pre-foreclosures and foreclosures have increased as well. Real Estate agents are no longer willing to show short sale properties due to a lender reduction of commission dollars. The MLS rules have recently changed to protect the Buyer agents commission dollars. No longer can we add verbage in the MLS that the commission may be renegotiated by the lender and if negotiated, listing and selling agent will split 50/50. Now, it's the Seller's agent that must take the hit in commission. Short sales are a tremendous amount of work and now, the listing agent can only negotiate their own commission. It's not fair and it will have a negative impact on our market.

We have found that there are two types of Buyers; 1) The buyer who wants the "deal" and are not particular in finding the perfect home. 2) The buyer who wants to find a home that suits their needs and are willing to pay market value to get what they want. The type 2) buyer is the one that we are seeing more of right now. This hopefully will help to stabilize our market.

Homes are selling right now but we still have a high inventory. Builders are beginning to take away Realtor incentives, such as 5% commission with a $20,000 bonus. This is actually good news for the consumer. This typically means that builder inventory is selling and they no longer need to "buy" buyers.

This is still a slow market and is still very much a negotiable market. I personally like this market and I know that as a Realtor, we can help make it a win-win situation for both Buyer and Seller.

Every real estate market (good or bad) brings con artists ready to take advantage of those who are desperate and/or in need. This is a very upsetting story; one which I truly hope finds its way to Sellers who are facing foreclosure.

As agents, we see it in the MLS listings, "Approved Short Sale, contingent upon 3rd party/lender approval." Although I am not an expert on this subject; I can only report true stories and situations I experience on a daily basis.

There is one listing that I am almost positive is Foreclosure Fraud. The listing shows that a home is being sold as a short sale. When I contacted the listing agent, he informed me that the contract needed to be made out to someone other than the person who appeared on the Tax rolls and Owner of the property. The house was being offered about $100,000 below current market values, but the contract had a limited time frame of 30 days; after which, the house price would increase at an undetermined price.

My client placed an offer on Sunday morning with a hefty deposit, offering $10,000 less than asking price with no other contingency other than inspection and lender approval of the short sale contract. This was a cash transaction. The agent was thrilled to have such a great offer, but informed me that the Seller could not sign the contract until they received lender approval. (Please keep in mind that this is false...the purpose of making the contract contingent upon Lender approval of a short sale contract is to protect the Seller and the Buyer. If the lender doesn't approve the contract, the contract is therefore voided/rejected.)

The listing agent directed me to write the contract in the name of a Family Trust. When I checked the Clerk of Court records and Tax Records, the owner of the property was of an individual. I contacted the agent who promptly proclaimed that the Owner of the home provided a Power of Attorney to a representative of the Family Trust. I then requested a Notarized copy of the documents supporting this Power of Attorney and the agent replied that it would not be a problem. That was on Monday. By Friday, the agent still had not provided a Seller accepted sales contract nor did he provide a copy of the Power of Attorney.

The following Monday, I contacted the agent again. He apologized that he had not provided me with the requested information, but he had received the lender approval and needed to make an adjustment to the closing date. BUT, before he could do that, my buyer would have to make the escrow deposit non-refundable to the Seller's representative along with a guaranteed closing date of May 29th. I told him that my client would not be able to move forward without a signed contract agreement to all of the lender approved terms. I still needed the proof of the Power of Attorney along with a letter from the lender that the contract terms had been approved. Well, that's when I heard it from the agent, "This isn't exactly a short sale for your buyer; this is a short sale for the Seller's representative. The representative was unwilling to sign the contract until the day of closing, at which time, he would do an assignment of his agreement with the lender.

RED FLAGS!!!! HELLO! STOP!!!! DO NOT PROCEED PAST GO!

So, let's review: A large non-refundable escrow deposit to someone that does not have the legal authority to sell a home. A "Seller" that is unwilling to sign a sales contract until the day of closing. No official letter or document providing proof that the Short Sale has been approved. Hmmmm....

The sad thing is this: The Sellers are clueless of what is happening. They were approached by this "Foreclosure Company" and convinced them to sign a Power of Attorney and to sign over the deed of the property. The Foreclosure Company does not record this change of ownership at the County. They present the Lender with an authorization letter allowing them to negotiate a "Short Sale". From there, they have 30 days on average to secure a buyer, at which time, they sell their assignment. They sell their assignment for a higher price than what the lender approves. The Foreclosure Company only has their own best interests at heart. This is the kicker...if the Foreclosure Company cannot secure a buyer for the property, they give the property back to the unsuspecting owners who truly believe that they have no further obligations to their mortgage company nor to the house. OR, they begin the process all over again and since the negotiated short sale could increase, the "representative" protects himself by making the Buyer agree to pay more if needed.

I'm sure there are other scenarios out there and many homeowners have been scammed with these Foreclosure Companies. It is scary. Again, I'm not an expert; just reporting from the trenches.

This NEEDS to be a lesson to everyone....seek the advice of an Attorney that represents YOU. Don't trust anyone; especially when promises are made-promises that seem too good to be true. If you think you maybe going into a pre-foreclosure situation, PLEASE talk this over with your CPA and attorney. This should be done PRIOR to missing a house payment.