I just read an article in the New York Times titled The Roller-Coaster Ride Called a Short Sale with great fascination.  It seems the post-bubble real estate challenges that we have been dealing with here in SW Florida for several years are now a reality in Manhattan as well. I don’t know about you, but it sure is hard for me to visualize many market parallels between the likes of Gator Circle or Gateway and Greenwich Village or Gramercy Park.

The reality of the matter is that here in Southwest Florida short sales have become “the norm” and a growing number of the real estate practitioners in the area have become very proficient at closing short sale transactions.  While only a hunch, I would bet that we lead the nation in the percentage of real estate practitioners who have successfully closed a short sale transaction.

Our regions success with mainstreaming short sales is good news for both buyers and sellers.  Sellers have hope for avoiding foreclosure and getting out from under a financially challenging ownership situation.  Buyers benefit from our current abundant inventory of short sale listings, many of which are priced at a discount to non-distressed properties.  Here is a resource for buyers to view active Fort Myers short sale listings.

Banks Fast Tracking Short  Sale Approvals

Just as we were getting ready to dump some tea from the Midpoint Bridge over our continued frustration with banks delaying short sale approvals……..the fairy princess of short sales has come to Southwest Florida and is approving these deals in droves!

We have a file draw full of short sale offers that we have made for clients, some stretching well back into 2009.  In recent days, banks have started aggressively working many of these offers with the goal of a rapid closing.  Just yesterday, we closed three short sale transactions, two of which had been in the pending drawer for over six months.

Much of my advice for buyers over the last couple of years has been focus your search efforts on foreclosure listings rather than short sales.  With the thaw in the approval process, Fort Myers short sales and Cape Coral short sales now look to be a more viable option for buyers.

A really quick Fort Myers short sale…..must be an oxymoron or a Realtor’s late night long tale!

High Point Place in the Fort Myers River District

Well not always, our team recently closed a short sale in 37 days!  This transaction was for a High Point Place condo located at 2090 W. 1st Street #1609 in the Downtown Fort Myers River District.

This 1,803 SF unit was listed for 299,000 /$165 SF and our client offered $270,000 / $149 SF.  The offer was accepted by the owner on 02/09/10.  Bank approval came within a month and the transaction closed on 03/18/10, a mere 37 days after offer acceptance.

Hopefully this kind of interval becomes the norm rather than the exception as our MLS database is still pretty weighted down with Fort Myers short sale listings.

My inbox today contained an e-mail that really troubled me, here it is (including typos) with the senders name redacted:

Subject
I BUY AND SELL SHORT SALES…

Comments
Hello Mr Mark, I’m an investor and I’m looking for a couple of self motivated and out- going agent(s) that wants increase their commissions by helping us find and buy high end properties in short sale. I have aligned myself with group of short sale negotiators in Fort Myers with years of experience in the short sale field, that will do the negotiation(s) with the lien holder(s) on your client/seller behalf at no cost to you or the seller(s). Once I acquire the property we will put property back on market (with you) giving you the chance to earn a double commission and becoming your seller(s) hero and by that the chances of more referrals and more daels. Please contact me ASAP to set up a meeting and discuss our working along side strategy on helping your clients as soon as possible. Sincerely:(redacted)

It is troubling to me that others have crafted business strategies to profit by taking advantage of others misfortune.  I bet they never mention to the troubled homeowner that a deficiency judgment may very well be hanging over their head for the next 20 years.

Business Week reports that lenders are stepping up their efforts to collect on deficiency judgments of mortgage defaulters. The article reports that banks are seeking deficiency judgments in both short sale and foreclosure scenarios. This stepped up approach by lenders has come as a major surprise to many who have completed a recent short sale transaction.

In the state of Florida, banks have five years to file the deficiency judgment and then 20 years to collect it.  To get paid, banks can seize wages and bank accounts and also put liens on other assets.

One of the buyer misconceptions about our current Fort Myers area real estate market is that banks will approve ultra-aggressive, low-ball offers on short sales and foreclosures.  Approving low-ball offers in Lee County has absolutely not been the operating model for lending institutions during 2009.   Particularly for foreclosures, much of the discount on these properties is reflected in the aggressive selling price.

The numbers speak for themselves regarding the ratio of selling price to listing price.  In 2009, 20,480 residential properties were sold in Lee County for a total of $2.7B.  The average listing price was $140,706 and the average selling price was $132,068.  This represents an average selling price to listing price ratio of 94%.  Anyone who tells you that banks are accepting offers at 50% of asking price is just not dealing with reality.

Complete inventories of Estero foreclosure listings, Fort Myers foreclosure listings and Cape Coral foreclosure listings are available on our site.

The Miami Press reports on new guidelines coming out from the U.S. Treasury  that will place a 10 day limit on bank approval for a short sale.  These guidelines cover mortgages for institutions participating in the Home Affordable Modification Program including JP Morgan Chase and Bank of America.   Fannie Mae and Freddie Mac backed loans are not part of this program, but these two organizations are working on their own short sale standards.

If enforced, these guidelines should dramatically alter the dynamics of a short sale transaction.  The current modus operandi on a short sale transaction involves bank approval delays that can stretch on for many, many months.  Pending, but unapproved or denied short sale listings are clogging our MLS, and setting unrealistic pricing standards in some communities.

I applaud the Administration and Treasury Department efforts to introduce standards to the short sale process.  Our extensive inventory of Cape Coral short sale listings and Fort Myers short sale listings could sure use some trimming through expediting the decision making process.

The St. Petersburg Times reports that the bottom feeding foreclosure workout firms will face significantly more scrutiny in Florida.  These workout specialists promise miracles, typically charge a desperate homeowner a large upfront fee and then don’t do anything to help save the home from foreclosure.

Here locally, there are firms operating in under the guises of saving a homeowner from foreclosure.  A common strategy of theses firms is to charge the homeowner a fee to list the home as a short sale.  These firms also look for a payment from the buyer at closing.  Typically language such as “A $2500 fee will be requested from buyer by third party at closing, so please adjust your offer accordingly” will be included in the MLS listing.  This third party fee is going into the coffers of the workout firm, rather than the lender who is taking the hit on the short sale.

The bottom line is that a homeowner facing foreclosure should never have to pay an upfront fee to list their Fort Myers short sale home.

The Sarasota Herald Tribune reports on short sale flipping fraud that is becoming more prevalent here in Southwest Florida.

In a nutshell, real estate professionals and investors are teaming up to by undervalued distressed properties from banks and then immediately flipping the property to a new buyer at a hefty increase.  The short sale flippers often cross the legal line with bogus broker price opinions (BPOs) to misrepresent the properties market value to the lender.

It is great to see that the DOJ is going after two real estate agents in Connecticut that have been charged with engaging in short sale mortgage fraud schemes.

According to a recent USA Today article, only 23% of short sale deals actually ever close. This figure came from a February 2009 survey by Campbell Communications of 1,300 Realtors. More than 90% of the agents cited slow responses from the lender as the reason that short sales were lost.

These figures certainly jive with what our team has experienced in the distressed property trenches of Southwest Florida.  It can be challenging trying to convince an eager buyer that the aggresively priced short sale listing has a very low probability of closing.  We are experiencing far higher closing percentages with foreclosure listings.

Here is a free resource that is updated daily to view Southwest Florida foreclosures:

• Bonita Springs foreclosures
• Cape Coral foreclosures
• Estero foreclosures
• Fort Myers foreclosures
• Fort Myers Beach foreclosures
• Pine Island foreclosures

If you do decide to move forward and make an offer on a short sale, please read this blog post about the questions that you need answered prior to submitting the short sale offer.

One of Florida’s major title insurance companies, Attorneys Title Insurance, announced that they will no longer insure transactions involving a short sale option contract.

A short sale option contract is a technique being used by opportunists to buy a short sale from a bank at below market value and then flip to a true buyer at a mark-up. These transaction are depriving the property lender of maximizing return on short sale and also raising prices for the ultimate buyer.

Closing this loophole and eliminating middlemen that were not adding any value to a short sale transaction is a positive step in cleaning streamlining short sale transactions. If you are in the market for a Southwest Florida short sale, there are plenty of options in both Cape Coral and Fort Myers.

In recognition of President Obama’s visit to Southwest Florida tomorrow, here is a brief poem titled Hey Mr. President:

Hey Mr. President
You’re coming to Lehigh Acres
To tour the despair
With our movers and shakers

Hey Mr. President
Please buy my Lehigh lot
I acquired it in ’05
Now it’s worth squat

Hey Mr. President
Samir embarrassed our county
He flipped without disclosure
And charged investors a bounty

Hey Mr. President
Bring jobs to Palm City
The economy has gone bust
And career options aren’t pretty

Hey Mr. President
We need a stimulus rocket
Pull some federal dollars
Out of your deep pocket

Hey Mr. President
We are swimming in red ink
Stimulate Southwest Florida
Or into the Gulf we may sink

Hey Mr. President
We thank you for coming
Please help our economy
So we can all start humming

PS. If you, Michelle and the girls want a cozy hide-away out on Sanibel, please give us a jingle.

The New York Times covers the economic challenges facing Southwest Florida, and in particular Lehigh Acres in an article titled In Florida, Despair and Foreclosures.

The article details the boom years and what has occurred since the real estate market busted. This article is a must read for anyone that has an interest in the Southwest Florida real estate market.

It is outstanding news that President Obama is visiting Lehigh Acres next week. This area is in dire need of economic diversity, maybe the federal government can play a role in bring new high-paying jobs to the region. Without attracting new jobs and industries, communities like Lehigh and Cape Coral will continue to boom and bust based on the health of the real estate industry.

According to statistics released by Realtor.com, the official website of the National Association of Realtors, real estate web searches in the greater Fort Myers area increased by 57% in October 2008 vs. October of last year.

We are seeing similar trends on our www.greaterftmyers.com site. Searches with significant consumer interest are for short sale and foreclosure listings.

In the trenches, we are having significantly more success completing foreclosure transactions and recommend that prospective buyers focus on these these listings.

Consumer Search Trends Show Increased Interest in Real Estate by Potential Home Buyers [MarketWatch]

I was just reviewing stats for my web site, www.greaterftmyers.com to see what pages buyers have been looking at over the last 30 days. As has been the case for the past several quarters, Fort Myers foreclosures, Fort Myers short sales, Cape Coral foreclosures and Cape Coral short sales topped the list.

There certainly is much buyer interest and enthusiasm for REO properties in the Fort Myers area!

One very popular page over the last 30 days was for this listing in the Gateway neighborhood of Stoneybrook, located at 12393 Green Stone Ct Fort Myers, FL. It is a 5 BR, 3 BA, 3,995 SF two-story home built in 2005. This home, which is owned by Wells Fargo Bank, originally sold for $445,000 in 2005 and is now listed at $345,750.

This is a beautiful home, although I am a bit puzzled as to why it is attracting hundreds of page views. If you are the interested party, please drop me a note and we can put a deal together for you!

NBC Nightly News with Brian Williams ran a story, The flip side of foreclosures: Affordable homes, which prominently featured the Fort Myers and Cape Coral area.

The net-net take away is that affordability has returned to the area in a big way. If you are just starting your search for a new affordable home in Southwest Florida, visit our Fort Myers foreclosures and Cape Coral foreclosure pages. These homes are owned by the financial institutions and are often priced way below other properties in the neighborhood.

The NY Times recently featured an article about investors that are focused on distressed property investing. The article touches on the three stages of distressed property: pre-foreclosure/short sale; properties in default that are being auctioned and real estate owned (REO) property.

It is estimated on a national basis that one in every 416 families is in foreclosure, the highest rate including the Great Depression. Locally, the numbers are much higher with an estimated one in every 66 homes facing foreclosure.

Unlike other parts of the country, investors have not yet returned to our market in any kind of meaningful way to accelerate the absorption of short sales and foreclosure properties. With few investors currently targeting the market, we have a significant build-up in the distressed property inventory and offer end-user buyers very limited competition when targeting distressed properties. Many deal can be had right now at prices that are far below replacement cost.

Finding Profits in a Distressed Market [NY Times]

Short sales are by far the most controversial and least understood type of real estate transaction in the market today. Many local Fort Myers short sale realtors are just fishing for an offer to start the short sale process. If this is the case, don’t be the unlucky one to have the 6 month offer out there that never gets answered. It happens, we see it every day. It is FRUSTRATING!

Thanks to blog.franklyreality.com for the following comprehensive list of questions that should be asked prior to looking at any short sale listing. If the listing realtor can’t answer these questions, then it is highly unlikely that the short sale will ever be approved by the bank.

1. Have you closed a Short Sale before?
2. Have you requested and received the short sale package from the bank, including the hardship letter?
3. Have you sent the package and have you confirmed receipt?
4. What communications, if any, have you had with the bank?
5. Has the bank approved the list price?
6. Have you received any other offers that you are waiting to hear back from the bank on?
7. Does the loan have private mortgage insurance (PMI) on it?
8. Is there one or two trusts? Any other liens?
9. What are the names of the banks? Are these FHA or VA loans?
10. How long do you estimate that the lender will take to provide an answer to an offer?
11. Has a broker price opinion (BPO) been performed? if so what was the result?
12. Do you have a written short sale approval?

Again these are the questions that need to be answered prior to looking at or making an offer on any potential short sale listing.

While the entire Southwest Florida real estate universe suffers from a nagging ailment known as “shortsaleitis,” I have been busy at the keyboard of my MacBookPro, with a robust supply of Red Bull and Oreos creating community specific foreclosure pages.

These pages display all the listings identified as foreclosures in the Greater Fort Myers and the Beach MLS System. These foreclosure listings are updated on a daily basis.

Check out:

Cape Coral foreclosures

Fort Myers foreclosures

Estero foreclosures

Bonita Springs foreclosures

With a top 10 ranking on Google for both Cape Coral short sales and Fort Myers short sales, we have been down and dirty in the short sale trenches representing many many buyers for several quarters. While short sale transactions are getting closed, success ratios are well below those for traditional transactions.

Serious buyers should focus their attention on the foreclosure listings as banks are not in the business of owning or managing real estate portfolios and have a keen desire to sell these properties. This is not always the case with short sales as the original owner is still party to the transaction.