When buying any kind of Palm Beach real estate, the mortgage is only one component of the whole purchasing equation.  Towards the end of the transaction comes the closing costs, a factor that many first time buyers forget to take into consideration when buying a traditional home or condo and which may affect affordability.

Closing costs vary depending on the transaction but you can expect to come into a few common items depending on the property in question such as Palm Beach condos, for example.  Appraisal fees are an optional but highly recommended cost that could significantly affect how much you end up paying for a property while preventing a seller from charging more than the home is actually worth.  A home inspection costs about $300 to $500 and, while also optional, can dramatically reduce costs you might end up paying later since you'll know about repair work that needs to be taken care of before purchase.

Credit report scores, the down payment, notary fees, private mortgage insurance, all of these fees can alter the final sum of your closing costs.  Your Palm Beach realtor or even the lender can give you an estimate of what these costs will be so that you won't have any unwanted surprises when you're in the final stage(s) of a purchase.

Pets are a great addition to a household but when it comes to properties like Palm Beach condos, pet rules vary depending on the building and its association.  Some people aren't pet lovers for a variety of reasons and seek out these types of buildings. But what happens when you find out your neighbor has a special privilege that allows them to keep a four legged critter?

Such a situation generally means that the person has a service animal and according to the Fair Housing Act, shared ownership communities are precluded from discriminating against people with disabilities.  Because associations are required to accommodate people with disabilities a service animal can also be allowed in Palm Beach condos that otherwise don't allow pets.

This rule has been stretched somewhat but there are steps that your association can take to ensure someone isn't just trying to bend the rules for whatever reason.  An association can request a written letter from a doctor stating that the person is "handicapped" under the definitions of the FHA and the Americans with Disabilities Act, and that the pet is necessary in order to deal with that disability.  Medical records can also be demonstrated to prove an existence of a disability that may not be obvious.

If you aren't a pet lover and are considering Palm Beach condos, just be aware that under special circumstances you might find Fido as one of your neighbors.

By Darrell Hofheinz - Palm Beach Daily News Staff Writer  

 If anyone needs any more proof that the market this year for single-family homes in Palm Beach has been better than in 2009, call real estate attorney Leslie Evans.

“In all of last year, there were 87 (single-family) sales. Through just the third quarter of this year, we had 89,” said Evans, who has released his third-quarter edition of The Evans Report real estate analysis. “I think what people need to take away from this report is that it appears that prices have bottomed out and sales are up.”

The report shows that sales of island homes and condominiums rose for the quarter encompassing July through September, continuing the largely positive sales trend evident since January.

Compared to the first nine months of 2009, single-family home sales this year were up by nearly half — from 61 to 89 — between January and September, as noted in the comprehensive report. Evans, who owns property on the island, has tracked Palm Beach sales for 10 years and provides legal counsel to real estate agencies and their clients.

“The number of sales has gone up for the first time since the same period in 2007,” Evans said.

The report offered more good news for sellers of single-family homes: Prices rose during the first nine months of the year over the same period in 2009.

But for homeowners who sold their condominium and cooperative units, the price picture wasn’t as rosy, thanks to a glutted market that has largely put buyers in control of the amount of cash that changes hands.

The median sales price of condos and co-ops dropped by $150,000 to $400,000, the report noted. The median is the price at which half the properties sold for more and half for less.

Those lower prices may have spurred sales, however. The reports shows that 211 condos and co-ops sold in the first nine months of the year, compared to 153 during the same period of 2009. And from July through September, there were 15 more sales during the third quarter of 2009, when 54 units sold.

“For all of last year, we had 198 condo sales,” Evans added. “So far in the first nine months of this year, there have been 211.”

Single-family prices up

Sellers of single-family homes this year have fared better than their counterparts in the condo market. The median sales price during the first nine months of this year was up by $187,500, rising to about $2.74 million from $2.55 million in 2009.

The third quarter saw 28 single-family sales this year, five more than in the same period last year. The numbers were even more dramatic when comparing sales in the first nine months of each year: There were 89 sales in 2010 versus 61 in 2009.

As far as high-dollar sales in the first nine months of this year, The Evans Report showed that only one home sold for more than $20 million — a sale recorded March 10 when Joel and Darcie Kassowitz bought 850 S. County Road from the Isabel Collier Read Residence Trust for $20.5 million. In contrast, there were no $20-million-plus sales in the first nine months of 2009 and only one for the entire year — December’s $24 million sale of 1200 S. Ocean Blvd.

Sales of single-family homes from January through September this year rose in two of the three neighborhoods listed in the report: In the North End, 63 houses sold this year versus 39 last year; while in the Midtown area, 15 houses sold this year compared to 10 last year. But for the same period in the South End/Estate Section, 11 houses sold this year versus 12 last year.

Median prices rose in each of the three areas, except for Midtown, where the median price was flat at $2.775 million.

In the report’s price-range breakdown of single-family houses, the category of homes priced below $2.5 million saw the most activity, with 41 homes sold in the first nine months of this year versus 27 in the same period last year.

Lower prices spur sales

For condo and co-op sales, the report uses Sloan’s Curve as a dividing line, and sales were up in both areas. The area to the south saw the greatest sales increase — from 93 to 136 units — when comparing the first nine months of 2009 and 2010, repectively. 

 Sales for $10 million and above, January-September

• $20.5 million, 850 S. County Road, March 10
• $19.32 million, 947 N. Ocean Blvd. (vacant lot), April 10
• $18.5 million, 540 S. Ocean Blvd., June 10
• $17.1 million, 340 Polmer Park, Jan. 10
• $13.5 million, 822 S. County Road, April 10
• $11.56 million, 1930 S. Ocean Blvd., Feb. 10
• $10.41 million, 111 Chateaux Drive, May 10
• $10.33 million, 686 Island Drive, June 10
• $10 million, 1930 S. Ocean Blvd., Sept. 10

— Source: 2010 Third Quarter Evans Report

Posted by Keith Jurow

With the expiration of the first-time buyer tax credit on April 30, there are now two main props keeping the housing market afloat.  One is the growing percentage of home sales financed by Federal Housing Administration (FHA) loan guarantees.  The other is the refusal of banks to put on the market foreclosed homes over $300,000.

In this article, we will take a look at the second factor.  A future report will examine the role of the FHA in keeping the market from collapsing.

Chicago and Cook County, IL

Let's begin with Chicago.  Cook County is comprised of Chicago and its contiguous suburbs and has a population of roughly 5.3 million residents.  It experienced a huge bubble during 2004-2006 and has suffered a substantial drop in both prices and home sales.

RealtyTrac.com has the most comprehensive database on foreclosures.  It claims to have specifics on over 1.5 million defaulted, auction-ready, and bank-owned properties.  The information is updated daily.  You can organize listings of defaulted properties; those scheduled for auction, and repossessed homes (REO) by date as well as by amount.  The website also provides a separate listing of those properties which have been put up for sale by the lender.

As of July 15, RealtyTrac listed 28,829 properties which had been foreclosed and repossessed by lenders.  Some have been owned by the bank as long as 2½ years without having been placed on the market.  Roughly half have been repossessed by the lender since late January 2010.

This year, banks in the Chicago area have foreclosed on a huge number of expensive homes.  RealtyTrac lists 2,650 repossessed homes for more than $300,000 and 169 for more than $1 million.

Here is where it gets really interesting.  Out of 28,829 repossessed properties, there were only 1,292 listed by lenders as "for sale."  The vast majority of these available homes were inexpensive.  A mere 29 homes over $300,000 were for sale.  In other words, the banks have withheld from the market 2,621 properties listed at $300,000 or higher.

There are probably two important reasons why banks have pursued this strategy.  First, they are concerned that placing these more expensive homes on the market will severely weaken an already thin upper tier market.

Even more crucial is that selling substantial numbers of expensive homes at discounts of 50% or more would compel the lenders to take substantial losses which have been avoided by keeping them off the market.

To give you an example, one repossessed home in the upper income suburb of Glencoe was purchased in January 2004 for $850,000.  Though not listed for sale yet, its opening bid price is $2,819,000.  This suggests that the foreclosed owner had refinanced the property to the tune of $2.8 million.  If the holder of the first lien put a home like this on the market, it could be forced to swallow a loss approaching $2 million or perhaps even more.

One big problem with this strategy is that the banks have also ramped up their placing of seriously delinquent borrowers into default - the first step in the foreclosure process.  RealtyTrac listed 39,963 defaulted properties in Cook County as of July 15.  All of them have been placed into default since August 2009 and half of them since early February of this year.  That is nearly 4,000 per month for the past five months and nearly 10,000 in the last two months alone.  Of these defaulted properties, there are 7,550 listed over $300,000.  Sooner or later, these homes are coming on to the market either as foreclosures or short sales.

What does the market for non-foreclosed properties in Cook County look like now?  As of July 15, trulia.com posted 38,877 properties for sale of which 14,866 were listed for $300,000 or more.

Sales of all new and existing homes and condos totaled only 9,057 in the first quarter of 2010 according to DataQuick.  That is an average of slightly more than 3,000 per month for a county with over one million owner-occupied units.  Since the peak in early 2006, home sales in the Chicago area have plunged by nearly 75%.  Median sale prices for Cook County slid to only $175,000 in the first quarter, down 10% from a year earlier according to DataQuick.

With so many homes listed for more than $300,000 now languishing on the Cook County market, it is somewhat understandable that the banks would be reluctant to add their foreclosed homes in this price range to a weak market.  When you add in the 7,550 defaulted properties in this price range which have not yet been repossessed by the banks, you can get a sense of the soaring number of homes that is ready to inundate an already glutted market.  When these homes come onto the market, as they eventually must, prices will inevitably plunge.

Current home sellers may have been taken in by all those reports lately which have been claiming that the housing market is "stabilizing."  Only 35% of all the homes listed for more than $300,000 have had their asking price reduced since posting on Trulia.  So these homes just sit ... and sit.

Miami-Dade County, FL

Most readers know that the collapse of the housing market in south Florida has been more severe than anywhere except perhaps Las Vegas.  A recent REAL ESTATE CHANNEL article reported that banks have been repossessing south Florida homes at a rate of 4,000 per month in 2010.  That would seem to suggest that the foreclosure debacle might soon stabilize.  Let's see.

According to RealtyTrac, on July 16 there were 10,858 repossessed properties in Miami-Dade County.  More than 2,100 have been held by the banks for more than a year without having been placed on the market and 600 for more than two years.  Over 1,400 of these foreclosed properties were listed at more than $300,000.

Out of 10,858 bank-owned homes, a mere 983 were listed for sale.  Nearly all were very recently placed on the market -- after June 1 of this year.  Only 11 of the 1,400 homes listed for at least $300,000 were actually on the market.  Same as in Cook County.  The problem is very similar.  Trulia posted 13,114 Miami-Dade County non-foreclosed homes for sale at asking prices of more than $300,000.  Only 21% have lowered their asking price.  As with Cook County, most just sit ... and sit.

Banks in the Miami area are also very reluctant to dump these higher-priced homes onto a still weak market.  But they have the same problem that banks in the Chicago area are facing.  RealtyTrac listed 22,753 defaulted properties for Miami-Dade County as of July 16.  All have been put into default since late January of this year.  Over 500 were defaulted in one day - July 15.  More than 1,500 of these defaulted properties were listed at more than $300,000.  All of these defaulted properties will be coming onto the market either as foreclosures or short sales.

The situation is even worse than in Chicago, however.  Loan Performance, a division of Core Logic, tracks those metros with the highest percentage of seriously delinquent prime mortgages.  This included loans that are either delinquent for more than 90 days or in the process of foreclosure.  The Miami metro had the highest percentage of any metro in the country at the end of this year's first quarter - 28%.  This means that more than ¼ of all outstanding prime mortgages in Miami were either in the foreclosure process or almost certainly heading there.

The cure rates tracked by Core Logic tell us that practically all of these serious delinquencies will eventually follow the 22,000+ defaulted properties into foreclosure or short sales.  The reluctance of banks to put higher end foreclosures onto the market will do nothing except delay the inevitable collapse in prices of homes purchased for $300,000 and above during the bubble years.

Orange County, CA

Orange County is situated between Los Angeles and San Diego.  With a population of roughly 3 million, it includes such cities as Irvine, Santa Ana, and Anaheim as well as the tony towns of Newport Beach and Laguna Beach.

Like so much of California, the housing collapse after the bubble peak has been severe.

As of July 16, RealtyTrac listed 6,270 repossessed properties.  Although 3,200 of them have been taken back by banks within the last six months, 650 have been in the inventory of banks for more than two years without having been placed on the market.  As with Cook County and Miami-Dade County, very few foreclosed homes in Orange County are listed for sale - 227.

More than 3,800 of these repossessed homes are priced above $300,000 and 650 for more than $1 million.  Yet not a single home over $1 million is currently on the market.  Only 85 of the 3800 bank-owned properties priced at more than $300,000 have been listed for sale.  This strategy is looking familiar, isn't it?

There are 5,694 defaulted properties listed by RealtyTrac as of July 16.  Although banks accelerated the foreclosing of properties in 2010, they have placed delinquent homes into default at an even faster pace.  Half of the 5,694 defaults occurred in the past two months.  More than 2,400 defaulted properties are listed at more than $300,000.

Are there a substantial number of non-foreclosed homes for sale at more than $300,000?  You bet.  Of the 15,599 homes listed for sale on Trulia, 12,249 have asking prices more than $300,000.

The inventory of homes for sale rose steadily in the second quarter of 2010 according to the Orange County Real Estate Blog.  Short sales now comprise 20-30% of all sales in most cities in Orange County and this has put downward pressure on home prices.  Had the banks placed more of their REOs on the market, prices would have very likely crumbled on the upper end.  When banks finally release these repossessed and defaulted homes to the market, which is what will happen.

Bergen County, NJ

Finally, let's take a look at the Northeast.  Bergen County is made up of fairly affluent communities which are located in northern New Jersey just west of the George Washington Bridge.  Although home prices have dropped rather substantially since the peak, it has not been nearly as bad as in California or Florida.

RealtyTrac listed 615 repossessed properties as of July 16.  Roughly 120 have been owned by the banks for more than a year without having been placed on the market.  Two-thirds have been repossessed since the beginning of 2010.

Similar to the three other counties we have reviewed, many of the foreclosed properties in Bergen County are expensive homes.  More than 100 are listed on RealtyTrac for $500,000 and above.  More than 350 of these homes are listed for at least $300,000.

Are the banks withholding most foreclosed properties from the market as banks have in the other three counties?  Absolutely.  On July 16, there were only 31 repossessed homes on the market.  A total of four were listed higher than $300,000.  That is four out of more than 350 foreclosed homes in Bergen County that are listed on RealtyTrac for more than $300,000.

Bank Withholding of High-End Foreclosures from the Market is Nationwide

The four counties which we have looked at reveal a clear pattern on the part of banks to withhold most repossessed homes from the market and nearly all of those listed on RealtyTrac for more than $300,000.  Is this occurring throughout the nation?  Take a look at the following table and judge for yourself.

 

Will this bank strategy keep the market for homes over $300,000 from imploding?  Not a chance.

Fannie Mae now requires an average down payment of 30% for securitized loans which it purchases or guarantees.  According to Fitch Ratings, mortgage delinquencies for prime jumbo mortgages soared to 10.3% in May as underwater owners walked away in droves.  That spells serious trouble for the five states which account for 2/3 of all outstanding jumbo loans - California, Florida, New Jersey, Virginia and New York.  The problem goes well beyond these states, however.  Housing markets throughout the United States for $300,000+ homes are in for rough sailing and prices are extremely likely to be headed for a real plunge.

Short sales are commonplace in today’s Palm Beach real estate market but they have that one critical factor that some homeowners still fail to realize and take into account: the uncertainty of knowing whether a bank will choose to pursue a borrower for the unpaid balance.  That twenty year limbo causes many to think twice before choosing the short sale route.

Thanks to Bank of America, that suspense may soon come to an end.

In what is likely to come as a huge sigh of relief to struggling homeowners considering a short sale, Bank of America is tweaking its rules regarding deficiency judgments. If borrowers can prove that they simply cannot pay the mortgage for their Palm Beach homes and have no assets, the bank will waive its right during the closing of a short sale transaction.  On the other hand if a borrower can indeed prove they’re capable of paying, a certain fee will be negotiated to be paid for the closing.  Borrowers who refuse to reveal their finances will still face the possibility of having to pay back the unpaid mortgage balance.

Are you in such a situation or considering a short sale?  Even if you aren’t, what are your thoughts on this latest move by Bank of America?

by Tara Struyk

The proliferation of services that help homebuyers and sellers complete their own real estate transactions is relatively recent, and it may have you wondering whether using a real estate agent is becoming a relic of a bygone era. While doing the work yourself can save you the significant commission rates many real estate agents command, for many, flying solo may not be the way to go--and could end up being more costly than a realtor's commission in the long run. Buying or selling a home is a major financial (and emotional) undertaking. Find out why you shouldn't discard the notion of hiring an agent just yet.

1. Better Access/More Convenience

A real estate agent's full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other agents. Both the buyer's and seller's agent work full time as real estate agents and they know what needs to be done to get a deal together. For example, if you are looking to buy a home, a real estate agent will track down homes that meet your criteria, get in touch with sellers' agents and make appointments for you to view the homes. If you are buying on your own, you will have to play this telephone tag yourself. This may be especially difficult if you're shopping for homes that are for sale by owner.

Similarly, if you are looking to sell your home yourself, you will have to solicit calls from interested parties, answer questions and make appointments. Keep in mind that potential buyers are likely to move on if you tend to be busy or don't respond quickly enough. Alternatively, you may find yourself making an appointment and rushing home, only to find that no one shows up.

2. Negotiating Is Tricky Business

Many people don't like the idea of doing a real estate deal through an agent and feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is probably true--assuming that both the buyer and seller in a given transaction are reasonable people who are able to get along. Unfortunately, this isn't always an easy relationship.

What if you, as a buyer, like a home but despise its wood-paneled walls, shag carpet and lurid orange kitchen? If you are working with an agent, you can express your contempt for the current owner's decorating skills and rant about how much it'll cost you to upgrade the home without insulting the owner. For all you know, the owner's late mother may have lovingly chosen the décor. Your real estate agent can convey your concerns to the sellers' agent. Acting as a messenger, the agent may be in a better position to negotiate a discount without ruffling the homeowner's feathers.

A real estate agent can also play the “bad guy” in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that a seller can reject a potential buyer's offer for any reason--including just because they hate his or her guts. An agent can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal. This can put you in a better position to get the house you want. The same is true for the seller, who can benefit from a hard-nosed real estate agent who will represent their interests without turning off potential buyers who want to niggle about the price.

3. Contracts Can Be Hard To Handle

If you decide to buy or sell a home, the offer to purchase contract is there to protect you and ensure that you are able to back out of the deal if certain conditions aren't met. For example, if you plan to buy a home with a mortgage but you fail to make financing one of the conditions of the sale--and you aren't approved for the mortgage--you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract.

An experienced real estate agent deals with the same contracts and conditions on a regular basis, and is familiar with which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you're buying or selling your home.

4. Real Estate Agents Can't Lie

Well, OK, actually they can. But because they are licensed professionals there are more repercussions if they do than for a private buyer or seller. If you are working with a licensed real estate agent under an agency agreement, (i.e., a conventional, full-service commission agreement in which the agent agrees to represent you), your agent will be bound by common law (in most states) to a fiduciary relationship. In other words, the agent is bound by license law to act in their clients' best interest (not his or her own).

In addition, most realtors rely on referrals and repeat business to build the kind of clientèle base they'll need to survive in the business. This means that doing what's best for their clients should be as important to them as any individual sale.

Finally, if you do find that your agent has gotten away with lying to you, you will have more avenues for recourse, such as through your agent's broker, professional association (such as the National Association Of Realtors) or possibly even in court if you can prove that your agent has failed to uphold his fiduciary duties.

When a buyer and seller work together directly, they can (and should) seek legal counsel, but because each is expected to act in his or her best interest, there isn't much you can do if you find out later that you've been duped about multiple offers or the home's condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent's commissions by the time the transaction is complete.

5. Not Everyone Can Save Money

Many people eschew using a real estate agent to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of an agent. This means that the seller gets the keep the percentage of the home's sale price that might otherwise be paid to the real estate agent.

However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can't both save the commission.

The Bottom Line

While there are certainly people who are qualified to sell their own homes, taking a quick look at the long list of frequently asked questions on most “for sale by owner” websites suggests the process isn't as simple as many people assume. And when you get into a difficult situation, it can really pay to have a professional on your side.