Allan Kleer

Headlines about the overall national real estate market reaching a “housing bottom” are starting to become more common. What does this mean in practical terms if you are potential seller (or buyer)?

The housing market is based on local conditions…and in the Greater Miami and Miami Beach area, it’s no secret that it’s a genuine buyer’s market. Asking prices for class “A” waterfront properties in prime locations are down as much as 50% off the high’s of 2006. Buyers have many choices both for homes and condos, and mortgage rates are near historic lows. Also, due to the large number of construction projects built from 2002-2007, buyers of quality properties today have many options as far as neighborhood, size, amenities, and style.

So…who are the potential buyers for all of those great single family home and condo deals?

As of this writing, July 15, 2009, we are in the midst of one of the most severe economic recessions in a generation. Along with the slow economy, I believe that we have a recipe for long-term price depression (as opposed to continued overall depreciation). During the boom market, real estate prices went up as available inventory decreased and potential buyers increased due to the availability of easy credit. Although the credit markets appear to have stabilized, credit is only available to a select few who qualify based on income, high credit scores, job stability and cash reserves. With the national unemployment rate still rising (soon to reach almost 10%), most families are currently finding their discretionary household budgets shrinking. Consumers who are worried about keeping their jobs, therefore, are not rushing to purchase a property.

Given this national economic situation, most potential real estate purchasers are cautious in taking on any new debt, as they watch the foreclosure crisis continue in the Greater Miami Real Estate market. For example, even the ultra-luxury buildings in South Beach are continuing to see more foreclosure related sales. As condominium and single family homeowners continue to struggle paying debt on properties that are “upside down”, this leads to more properties coming on the market as “short sales”. As “short sales” and bank-owned properties “REO sales” eventually become closed sales at deeply discounted prices, these become the new comparables for “closed sales”.

Any buyer who wants to get financing will also need an appraisal, which are being carefully scrutinized by banks. All major lenders are being careful not to have a repeat of the appraisal abuses that took place during the real estate boom (especially in the Miami market). Therefore, if a property does not appraise for the sales price, the lender will not approve the loan. This creates a significant challenge for future price appreciation, as the new price “standard” usually is strongly influenced by what is being appraised, which are the bargain sales occurring today as Short Sales and REO’s. Approximately 50% of the real estate transactions taking place in Greater Miami and Miami Beach today are “Short Sales” and Bank Owned properties.

In conclusion, we believe that due to the high costs associated with owning real estate in South Florida (mortgage payments, high maintenance fees for condos, property taxes, windstorm insurance rates, etc.) and the relatively limited pool of future buyers, the new “bargain prices” will become the true market values for years to come.

Will housing “turn around”, it depends! Once properties stop depreciating in price, I believe we will see price stabilization for many years to come.

Over the past few months, My team and I worked hard to bring our clients, online visitors, buyers, and sellers an updated user-friendly site. TheKleerTeam.Com has been updated to be the most adavance, comprehensive, and informational online real estate resource site for Miami Beach. The new Miami Beach Real Estate site will provide our visitors with one-stop soulution for obtaining information on bank-owned properties, short sales, and foreclosures.

With all the advance tools provided, visitors can research closed sales of Miami Beach single family homes and condos, condos for rent, and all the luxury properites and community information. Also offering buyers and sellers access to legal, mortgage, interior design, home staging services, and concierge information. Be sure to look on the right hand side panel for new additions and services. We are constantly upgrading our online presence and adding new features as requested by users from around the world.

Our "En Espanol" section of the website provides properties information and direct marketing of properties to South American buyers and brokers. Users also have the option to search for properties in Portuguese, French, German, and Italian. These features allow us to promote homes and condos for sale in Miami Beach to a truly global audience.

Last week, The Kleer Team went through an interesting experience involving a Miami Beach short sale condo at the Murano Grande. We had placed an offer for this short sale condo with one of our most loyal and qualified buyers after receiving a solicitation on behalf of a distressed owner who I happen to know (this South Beach condo is listed with a family friend). Unfortunately, shortly after submitting a contract significantly ABOVE the list price, we discovered that the price on the Multiple Lisitng Service was raised several times, and that the commission to cooperating Broker was changed to one percent, with the total commission payable of six percent.

Here's the problem - our ready, willing and able CASH Buyer was completely turned off by the lack of coherent pricing. Also, all short sales and bank foreclosures which we have dealt with in the recent past (and we've closed on many) stipulate commission splits of 50/50 between the buying and selling brokers. We subsequently found out that the listing agent for the condo convinced the current owner to accept a finance contingency contract (his own buyer) at a significantly lower price. Not only was this agent acting unethically with us, but the worst part is that the owner (and the lenders) have no idea of the games that this particular agent is playing in a desperate attempt to earn some extra commission income.

I firmly believe, especially in this market, that it's an agent's duty to do everything possible to sell a property for as high a price as possible to a QUALIFIED buyer. Any agent (or Brokerage firm) that is not willing to work for the best interest of their client should no longer be in the business. The old adage applies - "Let the Buyer (and Seller) beware."

Where do celebrities in Miami live? Without a doubt it has to be the Star Island. Star Island is a private exclusive island located on the Biscayne Bay, between Miami Beach and Downtown Miami. Star island is popular among celebrities and elite people from around the world. A few of those star celebrities who live in the Star Island are Gloria Estefan, Rosie O'Donnell, Shaquille O'Neal, Daniel 'Tommy' Mottola, and business leaders such as Phillip Frost. Star island is the most exclusive among the tri-island homeowner association comprised of Star, Palm, and Hibiscus Islands. Most notably, in the midst of the most severe housing downturn in a generation, high end estate homes such as the one highlighted below sold in just four months. Also of note is that the discount from the original asking price is relatively small.

Star Island Old World Charm



Located on an oversized 48,300 SF lot with over 220 linear ft. of watefront, this classic southern-style home features Old World charm. Featuring Southern and Eastern exposure towards Miami Beach, Fisher Island, and the cruise ships. Located only only five minutes from the excitment of South Beach. This single family estate offers exclusivity, privacy and is located on a 24 hour guard gated island community. Owners dock their yachts and live among the stars (the next door neighbor is Rosie O'Donell)!

: Oversized Waterfront Proeperty with 220 ft. on Water, Spectacular location on Star Island, Gated Island Community

: Orientation towards busy causeway and potential for traffic noise.

Sold Price: $8,100,000 (2008)
Original Asking Price : $9,750,000 (2008)
Bedrooms: 6
Bathrooms: 6
House S.F.: 4,720
Land S.F.: 48,300
Sold Date: September, 2008
Sold Price per S.F.: $1,716/S.F.
Discount from Original Asking Price: 17% (132 days on market)

A lot of my clients ask me what makes a property, specifically South Beach waterfront home or condo, a great deal. And today's active buyers want to know more about prices and how low can it get. South Beach luxury condos, such as Continuum South Beach, Murano at Portofino, Portofino Tower, Icon South Beach, and Murano Grande have seen a surge in sales activity in the past few months. Luxury waterfront homes and condos in South Beach are now selling at significantly discounted prices.

The recent sales of South Beach homes and condos demonstrate that buyers are willing to purchase luxury waterfront properties if priced right and significantly discounted from 2006 prices. But what is the right price for a luxury property? It all depends!

To demonstrate examples of "great deals," take a look at some of the recently sold South Beach condos and waterfront homes:

Continuum South Beach - South Tower PH-1

Magnificent and massive South Beach oceanfront 3-level penthouse. 360 views, 5 bedroom/7.5 bath, 13' ceilings (26' in dining room) & 7,000SF under a/c, pool, Smart house touch panels integrate high-end audio, video, auto shades, HVAC, lighting, security, 4-plasma TVs, wi-fi, private elevator, all on top of the most exclusive 13-acre gated enclave with spa/club, 3 tennis courts, 3-pools and 2 rest. at the southernmost tip of the most exciting part of South Beach. Also included in the sale were four private parking spaces.

: 12 acres on the Ocean, 360 degree views, One of a Kind Three Level Penthouse
: None

Sold Price: $9,900,000
Original Asking Price : $25,000,000
Previous Sales Price (2003) $7,000,000
Bedrooms: 5
Bathrooms: 8
Condo S.F.: 7,374
Sold Date: May 15, 2009
Sold Price per S.F.: $1,34
Discount from Original Asking Price: 60.4%

Bentley Bay Condo - South Beach Design Group Showcase Condominium

Amazing 270 degree views of Downtown Miami, Star Island, Fisher Island, and the Ocean from this contemporary designed two bedroom condominium. Terrazzo floors, custom lighting, clean design and decorator appointed finishes. The original owners had spent well over $200,000 in upgrades and finishes alone!

: 270 degree views of Biscayne Bay, Downtown Miami, and the Ocean, beautiful finishes & design. Boutique Building.
: High Maintenance Fees and construction issues at The Bentley Bay

Non-MLS Sold Price: $480,000 (2009)
Original Asking Price : $1,595,000 (2005)
Previous Sales Price: $1,090,000 (2006)
Bedrooms: 2
Bathrooms: 2
Condo S.F.: 1,250
Sold Date: May, 2009
Sold Price per S.F.: $384/S.F.
Discount from 2006 Asking Price: 72%

Palm Island Single Family Home with Old World Charm

Beautifully updated 2-story Mediterranean charming home on exclusive, guard-gated Palm Island. Paradise living on secluded island just minutes from the excitement of South Beach and downtown Miami. Easy commute anywhere in South Florida. Walk to new park/playground/tennis courts. 4 bdr/ 3 bth, updated kitchen, marble baths. Open & bright design.

: Charming Home, Spectacular location on Palm Island, Gated Island Community
: Small Lot, some work needed on property

Sold Price: $660,000 (2009)
Original Asking Price : $1,749,000 (2006)
Bedrooms: 4
Bathrooms: 3
House S.F.: 2,616
Land S.F.: 5,775
Sold Date: May, 2009
Sold Price per S.F.: $252/S.F.
Discount from Original Asking Price: 62%

Palm Island Single Family Home -Waterfront Double Lot

Waterfront home on a double sized lot with lush landscaping, 100 ft of open bay on 24 hour gate guarded Palm Island. Amazing views of downtown Miami and Cruise ships. The home included a private dock with Boat Lift, a two car garage, sauna, outdoor shower, pool, large entertainment room, and even a real working fireplace. Marble and wood floors throughout, stainless steel appliances, Hurricane Impact windows, and a balcony as well as covered Patio on the second floor to enjoy the views!

: 100 ft. Prime Waterfront Lot, Spectacular location on Palm Island, Gated Island Community
: Home needed some updating

Sold Price: $2,700,000 (2009)
Original Asking Price : $5,800,000 (2006)
Bedrooms: 3
Bathrooms: 3
House S.F.: 3,180
Land S.F.: 14,000
Sold Date: May, 2009
Sold Price per S.F.: $849/S.F.
Discount from Original Asking Price: 53%