Miami Real Estate Market Summary - September 2008

Summary - September 2008

For the month of September vs. August 2008, we did not see any significant changes in the Miami real estate market, other than to report that the number of either foreclosure or short sales by lenders continues to increase, particulary in the Brickell/Downtown Condos and Greater Miami market. For example, 32 of the 59 closed sales in Downtown/Brickell Condos, or 54%, were either foreclosure or short sales. Additionally, I think that it is pretty clear that the properties that are selling are in the less than $500,000 range, and this is further evident by a sizeable decrease in the number of pending sales in September vs. August for the $500,000 and over categories.

September's Featured Sale

This month's Featured Sale, is a one bedroom condominium on the 33rd floor of The Club at Brickell Bay, with a living area of 818 square feet (81 sq. metres), located in downtown Miami. The condo was purchased from the developer in August 2005 for $315,000. The owner, Cristina Rodriguez, then sold the property a few months later, in February 2006, to Francisco Grande for a whopping $600,000. Yes, that's correct. Then in August 2007, The Bank of New York foreclosed on the owner and took title to the property. Practically one year later, on September 23, 2008, this bank owned condo sold to an all cash buyer for $125,900 or $153.91 per square foot.

For additional information on Miami real estate, short sales or bank owned properties, please contact us at info@miamiangelproperties.com or call 305.673.5300.

The data used to generate this chart is gathered from the Multiple Listing Service ("MLS"). The data in the MLS is deemed reliable but not guaranteed. This data is for September 2008 for single family homes, unless otherwise indicated as condominiums.

Homes that are pending sales have had offers made on them, and those offers have been accepted by the seller, however the sale has not yet closed. The prices are the actual sales prices of all single family or condos that closed during the month of August. Please note that the areas that have the most foreclosures and distressed sellers, also have the largest disparity between asking and sale prices.

“Where Did You Go?”

Franz Reuther, or better known as Frank Farian, the famous German singer-songwriter and music producer of several pop groups, including No Mercy, Boney M and Milli Vanilli, needs no introduction. His has won more than 800 gold and platinum records. Unfortunately, with all of his fame and success, he has never completed his waterfront property in Miami Beach.

According to several online sources, while in Miami on vacation Farian was walking down Ocean Drive and happened to hear Marty Cintron singing at a local beach cafe. In 1995, he connected Cintron with brothers Ariel and Gabriel Hernandez to form the Miami based pop group No Mercy. Over the last decade the band sold more than 8 million albums and singles, with over 27 million compilations worldwide. And if you don't remember, No Mercy released the #1 Billboard dance hit "Where Do You Go."

In early 2001, Farian purchased a 41,000 square foot property at 3100 North Bay Road in Miami Beach for $3.0 million in the name of FAR Corporation. He then began construction on this Arabic inspired residence and never completed the work. As such, the property has been sitting vacant and boarded up for many years. Fortunately for Farian, the value of such prime waterfront property in today's Miami Beach real estate market is at least $100 per square foot, and it remains to be determined if there is much value in the boarded up structure.

So my question to this missing music producer and Miami Beach property owner is "Where Did You Go?"

Venetian View to Impress

PRICE : $449,000

Description | Everywhere you turn, view, view, view.  Wake up to a view, eat to a view, sun bathe to a view, sleep to a view...get my point?  Located on the classy Venetian Isles, this is true Miami Beach living.

Address | 1000 Venetian Way #710

Property Type | Condominium

Year Built | 1983
Living Area | 1030
Bedrooms | 1
Bathrooms | 1
Waterfront | Y

Download a full description (PDF):

100 Venetian Way # 710 (Right click the link and choose "Save link as")
 

Normandy Isle ~ Call: 305.673.5300

PRICE : $359,000

Description | No, we didn't misprint the price, it really is a steal!  At less than $300/sqft, you and your family can rest comfortably with all the amenties of you can imagine: hot-tub, big yard, sun-room, and walking distance to shops and restaurants. 

Address | 1552 71st Street

Property Type | Single Family
Year Built | 1941
Living Area | 1,488 SF or 138 m2
Bedrooms | 3
Bathrooms | 2
Waterfront | N

Download a full description (PDF):

1552 71st Street (Right click the link and choose "Save link as")
 

Florida Foreclosure Laws

If you are planning on purchasing distressed property in the state of Florida, then you should be knowledgeable of the foreclosure laws. Please find the quick facts:

•  Timeline: Typically 180 days
•  Right of Redemption: Yes
•  Deficiency Judgments Allowed: Yes
•  Primary Security Instruments: Mortgage
•  Judicial Foreclosure Available: Yes
•  Non-Judicial Foreclosure Available: No

All mortgages are foreclosed in equity. The foreclosure claim shall, if tried, be tried in the court without a jury. In a mortgage foreclosure action, the court severs, for separate trial, all counterclaims against the foreclosing lender.

The court order of foreclosure is required to specify how the foreclosure must take place, and the foreclosure must take place on those terms. When a legal advertisement or notice of the foreclosure is required to be placed in the newspaper, then it is the responsibility of the lender or their representative to place such an advertisement or notice.

Equitable Right of Redemption ends at the foreclosure sale. There is a period of time after the sale that "the court reviews the sale to ensure that a fair price has been paid." This period of time, which is typically ten days, allows parties to object to the sale on the basis that proper procedures were not followed or collusion existed between bidders, for example. Following this period of time, the Certificate of Sale is filed and the sale is confirmed. If the sale is not confirmed, then another sale is ordered. Following the confirmation of the sale, the lender may sue the former borrower to obtain a deficiency judgment.

Recently, mortgage law experts claimed that the incentive to walk away from a home loan is highest in states that have anti-deficiency statutes, which prohibit lenders from suing borrowers for additional funds following foreclosure. This handful of non-recourse mortgage states includes the high-foreclosure states of Florida, California and Arizona. According to Donald Lampe, a North Carolina based mortgage lending attorney "the statutes generally prohibit or limit a lender's ability to go after the borrower's assets to satisfy unpaid mortgage debt."

For more information on buying a foreclosure or bank owned property in Miami, please do not hesitate to contact us at info@miamiangelproperties.com or 305.673.5300.

Captain Burke’s Miami Beach Castle

Passing by this totally unique property while out boating this weekend, I was thinking about how many secret or strange hideaways we have in Miami Beach. This particular Miami Beach abode has all the makings of a castle, with iron gates, gargoyles, turrets, towers, parapets, a draw bridge, sculptures of knights and dragons, and a 65,000 gallon salt water moat filled with sand sharks. It is located at 4462 North Bay Road and I encourage you to Google the address to see it from a satellite view.

This castle was the creation of the Captain Michael Burke, the founder of Windjammer Barefoot Cruises. According to sources that have visited the castle, the inside of the castle is as Gothic as it could be. There is a grand entrance hall with a huge fireplace and a seating area that replicates King Arthur's Excalibur. The dining room boasts its own round table, which was also inspired from King Arthur's Knights of the Round Table. The media room is a blend of medieval architecture with modern technology featuring a circular aquarium and stained glass. Outside the bewitching medieval gloom is a heated, lagoon-style pool extending into the house with a twisting 30-foot slide.

According to public records, in early 2007 Captain Burke sold his infamous medieval castle to Antonio Rodriguez for $7.6 million. The new owner was able to borrow $5.0 million from Washington Mutual in the form of a 12 month MTA Option ARM with a1% start rate. Wow!

Now I don't know about you, but I would love to see the comps on that appraisal.

Short Sales 101

A "short sale" refers to the sale of real property for a price that is less than the owner's outstanding debt secured by the property. In a typical short sale scenario, the seller is in financial distress and is currently defaulting on the debt secured by the seller's property, or will likely default in the future. Additionally, the property securing the seller's debt has declined in value due to market conditions and the seller wants to sell the property to satisfy as much of the debt as possible.

The short sale typically involves three parties; (i) a real property owner, (ii) a lender that holds a lien against a seller's real property, and, (iii) a buyer.  So far it sounds simple enough, however, negotiating and completing a successful short sale may be complicated and time consuming. While most lenders or banks will require similar documentation, they do have their own specific requirements or procedures. 

The lender's loss mitigator will require the following documents:

• A signed Letter of Authorization from the seller authorizing their lender to discuss the loan with the investor or negotiator.
• A fully executed purchase and sale agreement contingent upon the lenders approval of the short sale. Please note that they will be looking for minimal contingencies so keep it clean!
• A hardship letter from the seller clearly explaining why they are behind on their mortgage payments and why they will not be able to make payments in the future.
• A financial declaration from the seller itemizing their monthly income and expenses.
• The most recent three to six months of the sellers bank statements.
• The most recent two years tax returns of the seller.
• A HUD-1 Settlement Statement showing an accurate statement of closing costs and net payoff to the lender.
• If necessary, a property condition and repair statement [use a licensed contractor for the estimate].

It is important that you do not piece meal the lender's representative, so submit all your documents at the same time. Once the complete package is submitted and accepted, they will then order a Broker Price Opinion (BPO) to assist in their decision.

While there is no perfect method to work on short sales, by following these basic steps you will separate yourself from the rest of the pack and receive faster feedback from the mitigator.

If you would like further information on properties available for sale, please send us a comment or click here to search for properties.

Valuable Tip: If you are purchasing a property in an approved short sale, and you are successful in obtaining financing with a high loan-to-value ratio ["LTV"] that requires mortgage insurance, remember that according to today's guildelines that the MI company will use the appraised value and not the purchase price to determine your LTV. Therefore, if the property appraises higher than the purchase price, the cost of your mortgage insurance may be lower than anticipated!

The Economy in 2000 vs. 2008

An article from the Chicago Tribune:

Sand in my Shoes

Amidst all of the negativity in the media, erupting presidential election, stressed global stock markets, historical government bailouts, and an ever-growing division in our country, we enjoyed an amazingly beautiful Sunday on the beach. With a light northeasterly wind, mild surf, water temperatures around 76 degrees, crisp blue sky, and warm fall sunlight, we left the beach without a worry in the world. This is what the Miami Beach lifestyle is for me, and we get to enjoy this all year round!

So other than sharing my experience of the beach this past weekend with you, how does this translate to all the negativity in real estate and the economy out there?

Consider the following as food for thought:

• Countrywide Financial,  under a settlement reached with the state's attorney general over alleged abusive lending practices, announced that they will provide Florida homeowner's up to $1 billion in mortgage relief, loan modifications and cash payments to some borrowers.
• If a first time home buyer purchases a primary residence and applies for credit prior to July 1, 2009, he or she will receive a $7,500 tax credit in 2009 when they file their federal income taxes, but it must be paid back over time and there are a few exceptions. Practically a 15 year loan interest free!
• There are literally hundreds of opportunities out there to take advantage of all the distress in the market and buy a fantastic piece of real estate at very attractive prices. Consider the recent sale of a 2,059 square foot oceanfront condo, with 2 bedroom and 3.5 bathrooms, in the presitigous Bath Club located at 5959 Collins Avenue, Miami Beach. The former owner purchased the unit for $1.45 million in 2005 from the developer, and the new buyer just paid $438,100 at auction.
• On October 3, 2008, Florida Governor Charlie Crist signed an executive order to free up $571 million in state backed financing as part of an effort to assist home buyers to obtain low interest mortgages through the Florida Housing Finance Corporation.
• As part of the Housing and Economic Recovery Act passed by Congress, Miami-Dade County will receive $62.2 million to buy foreclosed properties and rehabilitate them, as well as offer low to middle income home buyers help with down payments and closing costs.
• Homeowners facing foreclosure need information, and the U.S. Department of Housing and Development offer a one-stop shop online that offers assistance. The Guide to Avoiding Foreclosure can be found by going directly to www.hud.gov/foreclosure.
• Hope Now, an alliance between counselors, servicers, lenders, investors and other mortgage market participants, is a FREE service to help homeowners avoid foreclosure through mortgage workouts. To contact Hope Now or a HUD Approved Housing Counseling Agency, call 1-888-995-HOPE or click here for further information.

It is very sad that suicide is becoming an increasingly popular response to debt, as in the case of Carlene Balderrama of Taunton, MA.  Balderrama killed herself with her husband's rifle on the same day that her mortgage company was going to auction off her house.

In this country there are so many options available to us. Finding assistance is often just a phone call away.