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D. Michael Burke's Blog

By D. Michael Burke | Agent in Bonita Springs, FL
  • The Top 10 Buyer Turnoffs

    Posted Under: Home Buying in Bonita Springs, Home Selling in Bonita Springs, Curb Appeal in Bonita Springs  |  June 5, 2012 1:00 PM  |  110 views  |  No comments

    While the market does seem to be turning around here in Southwest Florida, that doesn’t mean you shouldn’t put in the extra effort to sell your home. There are things you can be doing to speed up the process AND there are certain things that will send potential IMG_0709homebuyers runningaway from your home! The point is why not be ahead of the game and set up your home sale to appeal to homebuyers not only in price, but in other ways that homebuyers consider important?

    In order to do this, you’ll need to know what homebuyers DON’T like! Here are 10 buyer turnoffs that sellers should avoid at all costs.

    1. Dirt. Hands down, nothing turns off a buyer quicker than a dirty house. The biggest mistake is not getting the home in the best possible condition. It is important to get your home in the absolute best condition possible. Go the extra mile with steam-cleaning tile and grout to replacing carpets. If the carpets are old and smelly, you should put in new carpet; if they’re relatively new, you should at least have them cleaned. The home should be neat and clean and free of all debris.

    2. Odors. Make sure your home smells fresh and inviting. Odors are a big one, especially kitchen odors. While your home is on the market, you may want to think twice about cooking fried food, fish or greasy food. Pet odors are a big no-no as well! Some pet owners mistakenly believe pet smells to which they’ve become accustomed to help make their abode homey. Nothing could be further from the truth. If you’re a dog person, you tend to think everyone else is a dog person, but the truth is, a large percent of the population are not pet owners. Eliminate all traces of pets, not just pet odors. It’s important to get rid of pet paraphernalia and have a "pet plan" to make sure the animals are not around when the house is shown. Leaving pet items out, like leashes, dog dishes, and cat litter boxes, will immediately turns off a buyer because they wonder, ‘What has that animal done in the house?’ The same rules hold true for smokers: remove all ashtrays, clean all curtains and upholstery, and consider smoking outdoors while your home is on the market.IMG_0719 Interestingly, next to the kitchen, the smelliest room in the house is actually the living room because that is typically the room that has the most fabric, so that is where odors get absorbed.

    3. Old fixtures. Want buyers to roll their eyes? Leave old fixtures on your doors and cabinets. Your best bet is to change out old fixtures in your house. New cabinet hardware and doorknobs will probably cost about of $400 or $500, but it makes a huge difference. The same holds true for dated ceiling fans, light fixtures and kitchen appliances. Homes that have old fans, lights, ovens, microwaves, ranges and dishwashers can really turn a buyer off. Even if you say you’ll take care of it later, it will impede you from getting the highest price possible for your home.

    4. Wallpaper. True, your grandmother may have had it in every bedroom. Your mom may have loved it as a room accent. But today’s buyer wants no part of wallpaper. Wallpaper is a pain to remove and simply adds another chore to a buyer’s to-do list. And, it’s important to consider that Wallpaper is extremely personalized. You’ve spent hours looking over books to pick out the wallpaper you want, so what are the odds that the person walking in the door will also like that wallpaper that you picked out? Probably none!

    5. Popcorn acoustic ceilings. Times change, and with them home decor styles. Acoustic popcorn ceilings, once the must-have for fashionable homes in the ’60s and ’70s, now badly date your space. If you can’t stomach the cost or the mess to remove the overhead popcorn, be prepared to credit a buyer in certain markets in order to close a sale. The popcorn acoustic ceiling is a major, major turnoff to buyers these days.

    6. Too many personal items. Psychologically, when buyers tour a home, they’re trying IMG_0811it on to see how it fits, just as they would a skirt or a pair of pants. If your house is cluttered with too many personal items, it’s like the buyer is trying on those clothes with you still in them. A fit is unlikely. Anything that makes your house scream ‘you’ is not what a buyer wants to see. Make sure you “decorate to sell” not “decorate to live” – there is a difference. Try to eliminate personal items, including family photos, personal effects and even unique colors.

    7. Snoopy sellers. Realtors and buyers alike generally cringe when the seller greets them at the door for a showing. Don’t walk around with the potential buyer and put in your two cent’s worth. While you may think it is helpful, it really isn’t. If your Realtor is worth his/her salt, he/she will discourage you from doing this as well.

    8. Misrepresenting your home. Misrepresenting your house online in the multiple listing service is a sure way to really upset buyers and their Realtors. The image of your home online may be great, but when the potential buyer drives by and sees acres of ramshackle mobile homes across the street, they will run for the hills. Obviously, sellers are going to paint the best picture they can, but be careful not to put your home in a light that is not accurate.

    9. Poor curb appeal. Much is made of curb appeal and for good reason. It’s your home’s critical first impression that lasts with most buyers. You have to trim and edge your yard to get it into the most immaculate condition you can. Every little detail counts. To not power-wash the exterior or leave mud dauber and wasp and bird’s nests in your eaves and above your doors is a mistake.

    10. Clutter. Whether inside or out, less is more when it comes to clutter. Start de-cluttering in the closets. Your closets should be half-full with nothing on the floor because IMG_0913most people looking for a house have outgrown their previous house. Showing them that you’ve still got room to grow gives them a reason to buy. Kitchens and built-in bookshelves should showcase spaciousness by following the rule of three. For kitchens, there should be no more than three countertop appliances. Meanwhile, bookshelves should be divided into thirds: one-third books, one-third vases and pictures, and one-third empty. The home office should be very generic so any type of professional can imagine living there. Anything more will be a distraction. If you have small children, pack away extraneous "kiddie litter" and keep a laundry basket handy for quick pick-ups. When you get that phone call one hour before a showing, toss everything in that basket and take it to the car with you and your kids, and you’re all set.

    If you’re selling your home in Southwest Florida, these 10 tips are sure to get you on the right track fast to a home sale! And, if I may digress a bit, if your home is currently listed, do NOT take your home off the market in these upcoming summer months! Call me and I’ll tell you why! In the meantime, leave your home listed, follow the suggestions in this article and you’ll sell that home!

    By D. Michael Burke, P.A. Keller Williams Elite Realty

    Michael@CoconutPointRealEstate.com

    www.CoconutPointRealEstate.com

  • Southwest Florida Community Market Trend Reports

    Posted Under: Market Conditions in Bonita Springs, Home Buying in Bonita Springs, Home Selling in Bonita Springs  |  May 30, 2012 12:20 PM  |  91 views  |  No comments

    Market Report Example

    View the online version of the May 2012 Email Market Reports of the Follow Communities.

    If you would like to sign up to receive these email market reports automatically please send me an email with the community you would like emailed to you.Justin@CoconutPointRealestate.com


    20,000+ email marketing campaigns featuring our listings. We feature our homes in our monthly email broadcast which goes to 20,000+ addresses all across the nation and internationally. Send emails featuring your home to agents who have listed or sold in your area. “95% of the time an agent other than the listing agent will bring the buyer for your home.” ( NAR statistic ) Our email marketing campaigns have a click rate 2.5 times better than the national average.

  • 10136 Orchid Ridge–Shadow Wood at the Brooks

    Posted Under: Home Buying in Bonita Springs  |  May 30, 2012 12:18 PM  |  80 views  |  No comments

     

    10136 Orchid Ridge Ln Located in Shadow Wood at the Brooks

    Award winning estate home beautifully blends the Mediterranean and Caribbean boasting custom water-fall rock-style pool/spa and reflection pool nestled to the living room, nook, library’s wall of miter windows. Family room, 3 walls of zero edge doors, built-in entertainment center. Lanai leisure areas and summer kitchen with fireplace and cathedral ceiling in cypress wood with lake and golf course views beyond. Gourmet kitchen custom cabinetry, built-in appliances, gas cook top, 2 wall ovens, granite tops and butler’s pantry. Exquisite 1st floor master suite, vestibule, walk-in closets and luxurious bath, his/her vanities, marble counter-tops and shower with tropical atrium beyond. 1st floor guest bedroom w/private bath and 2nd floor with media room, bedroom, bath, wet-bar and balcony. Array of custom detail/architecture throughout. 2 fireplaces, built-ins, travertine flooring, hardwood in library, accent in-lays, faux paint, coffer ceilings, crown molding, garage Tek storage built-in

    front (3)

    10136 Orchid Ridge – Features 

    Award winning custom floor plan built by Kingon Homes

    Block walls: Concrete Tie Beams Reinforced with Steel

    Roof Tile: Color Through Concrete

    Soil Treatment: Subterranean Termite

    Pest Control: Taexx Built-In System

    Insulation: R19 Walls Plus 1” Energy Board of R 6.5, R30 Ceilings

    Windows: High Impact, Polyurethane Sealant

    Window Miter: Living Room, Breakfast Nook

    Window Treatments: Plantation Shutters, Silhouette Blinds and Professional Treatments

    Interior Doors: Solid Core with Raised Wood Molding, Polyurethane Sealant

    Plumbing: Upgraded Designer Fixtures

    Front Entry Door: Double Custom Iron

    Disappearing Corner Sliding Glass Doors: 3 – Family Room

    French Doors: Library, Guest Suites

    Staircase Railings: Wood and Rod Iron

    Appliances: Built-In GE Monogram Profile, 2 Wall Ovens, Gas Cook Top, Refrigerator, Microwave, Dishwasher, Front Load Washer, Dryer, Lanai Summer Kitchen Gas Cooking Center

    Cabinetry: Custom Wood – Kitchen, Butlers Pantry, Dining Serving Room/Wine Bar, Master Bath, Guest and Pool Bath

    Custom Built-In: Library Built-In Office Cabinets with Built-In Files and Family Room Entertainment Center

    Master Suite: Double Door Entry Vestibule with Archways/Columns to Suite and Bath, Two Walk-In Closets

    Master Bath: Marble Tub Deck and Counter-Tops, Jetted Tub, Bidet, Divided Vanities, Make-Up Vanity, Sunken Jetted Tub, Rain Shower Head and Handheld Shower

    Garden Atrium: Master Bath

    Powder Room: Custom Designed Vanity with Vessel Sink

    Lanai: Concrete Columns and Arches

    Fireplace: 2 – 1 Living Room, 1 Lanai

    A/C Units: 3 – Zoned, High Efficiency. 2 – Main Level, 1 – Second Level

    Coffer Ceilings: Custom Throughout, Finished in Faux Paint and Wood in Breakfast Nook

    Cathedral Ceiling: Lanai Outdoor Living Room Finished in Cypress Wood

    Faux Paint: Custom Throughout and Artist Mural in Butler Pantry

    Trim: 7” Crown Molding, 7 ¼” Base

    Surround Sound: Family Room, Media Room and Additional Speakers Throughout

    Flooring: Travertine Throughout and Lanai/Balconies, Accent In-Lays Throughout, Hardwood Library, Carpet Bedrooms and 2nd Floor Media Room

    Accent Tile: Kitchen Designer Hood and Backsplash, Floor In-Lays Throughout, Wall Tile Baths

    Counter-Tops: Kitchen Granite, Summer Kitchen, Butler’s Pantry, Formal Dining Room Wine Bar, Media Room Wet-Bar, Powder Room and Guest Bath Travertine, Master Bath Marble

    Lanai Outdoor Living: Built-In Summer Kitchen, Fireplace, Water Fountain and Sitting Area with Octagon Cathedral Ceiling

    Lanai Leisure and Dining: 1 – Dining Covered with Fountain, 1 – Leisure Covered. Both with Separate Entrances from Family Room

    Pool/Spa: Custom Water-Fall Rock Style Heated Pool/Spa with Reflection Pool and Fountain, Sunning Deck, Pool Bath

    Balcony: Corner Glass Sliders to Media Room and Guest Suite

    Landscape Lighting: Front and

    Rear. Extensive Lighting on Pool/ 
    Spa Rock Features and Fountain. Pool Interior with Color Changing Lights

    Garage: Doors Insulated, Keyless Entry Pad, Garage Tek Storage Built-Ins and Epoxy Floor Finish

    Driveway/Front Entry: Interlock Paver

    Laundry Room: Built-In Cabinets, Tub

    View: Lake and Beyond #8 Tee Box and #7 Green

    The numbers below were taking of Shadow Wood Estate homes Sold from November 10, 2011 to May 10, 2012. The lowest price per sqft of an Estate Home sold in the last 6 months is $326 Per Sqft. 10136 Orchid Ridge is currently priced at $294 per SqFt.

     Price based on Price per SqFt – 5,427Price Per Sqft
    Min $          1,769,202 $                326
    Med $          1,877,742 $                346
    Max $          1,980,855 $                365

    This home is one of the best best values in Shadow Wood

  • There is no offseason in the Southwest Florida Real Estate Market

    Posted Under: Home Selling in Bonita Springs  |  May 30, 2012 12:17 PM  |  68 views  |  No comments

    There is no offseason in the Southwest Florida Real Estate Market

    There is a marked difference in inventory now available in the Southwest Florida real estate market. Typically during this time of year, we will see inventory go down. However, as history has shown, home sales in Southwest Florida remain pretty steady during the summer months. Last summer, according the Multiple Listing Service for the Southwest Florida markets averaged 576 homes sales per month during the months of July-Dec 2011 – that is a pretty respectable number for a region that has an “off-season.” The point is that if you are thinking about listing a property or you have a property listed currently, this is not the time to remove that listing!

    Based on the sales history I mentioned above, you could say that while this season is nearing an end, we could see strong sales last year well into June 2011. The reason for this is because many of our winter visitors keep tabs on Southwest Florida long after they leave. The Internet and, of course, mobile devices have allowed those visitors to continue looking at the Southwest Florida real estate market, checking the listings and keeping in touch with agents all summer long. I expect to see that trend move into this June as well, as our snowbirds have been snatching up homes in this market all season long.

    Additionally, summer buyers are a little different as well. These are buyers who have been monitoring the market all season. They’ve looked at different neighborhoods, amenities, home prices, and the market stats. These folks are now serious buyers who are at the jumping off point. And, these buyers don’t necessarily have to be in Southwest Florida. If you remove your home from the market now, you’re likely to miss these serious buyers. You’ll also miss the decrease in inventory available, which can be helpful in seeing increased showings and activity.

    You may also be inclined to ask your Realtor to remove your listing and just promote via word of mouth a.k.a. the “pocket listing.” This too is the wrong thing to do for the reasons stated above AND because we know that over 95% of all real estate searches take place on the Internet. If you’re selling a home in Southwest Florida, not continuing your Internet presence is just an all-around a bad idea in any season.

    Lastly, if you’re thinking of selling your home and you’re looking for representation, now may be the time for me to toot a horn. Just recently myself and my team, Team Michael Burke / Coconut Point Team, was recognized as one of just five top national agent/teams who have excelled in business growth. Featured as the cover story in Keller Williams’ national publication, Outfront, our team was credited as growing our business from $9 to $24 million in production in just one year by applying solid business planning, economic principles, and offering the best in client marketing resources.

    Speaking of resources, here are some incentives and exclusive Coconut Point Team Tools and Resources to help you consider our team to represent you:

    • First, be on the lookout for our updated email template! Through our new email template, you’ll be able to review our messages and quickly access such as our featured listings, market reports, and quick links to various communities and all of our exclusive market tools below!
    • Monthly Market Report. Let me present you with the most accurate data about your neighborhood including closed and active home sales.
    • The Coconut Point Press. This is my widely-read and exclusive printed publication and online edition, where your home is prominently spotlighted.
    • Elite Seller Feedback System – Take advantage of my sophisticated and exclusive system that provides valuable feedback from your showings via email, so you know what buyers are thinking.
    • Interactive Home Illustration – Give buyers what they want to see with an interactive floor place and professional videos of your home!
    • Superior Marketing Plan – Our marketing plan is unlike all others in this market! It will maximize exposure and get top dollar for your home.

    There is difference between marketing and just listing a property. I am sure you will agree after you check out our unique and aggressive marketing tools to get the job done for you weather you are buying or selling.

    Join our team today and let us help you achieve your objective, whether it’s buying or selling!

    D. Michael Burke 
    Team Michael Burke / Coconut Point 
    Keller Williams Elite Realty 
    Michael@CoconutPointRealEstate.com 
    www.CoconutPointRealEstate.com

  • Need Inventory for our Summer and Fall Buyers

    Posted Under: Home Selling in Bonita Springs  |  May 30, 2012 12:16 PM  |  59 views  |  No comments

    It never ceases to amaze me how quickly time goes by. Here we are in May already and I’m already noticing the slowing down of traffic. You can almost hear a big sigh amongst those whose businesses were booming during season this year! Additionally, there is a marked difference in inventory now available in the Southwest Florida real estate market. Typically during this time of year, we will see inventory go down. However, as history has shown, home sales in Southwest Florida remain pretty steady during the summer months. Last summer,

    according the Multiple Listing Service for the Naples, Bonita Springs and Estero markets, we averaged 576 homes sales per month during the months of July-Dec 2011 – that is a pretty respectable number for a region that has an "off-season." The point is that if you are thinking about listing a property or you have a property listed currently, this is not the time to remove that listing!

    Based on the sales history I mentioned above, you could say that while this season is nearing an end, we could see strong sales last year well into June 2011. The reason for this is because many of our winter visitors keep tabs on Southwest Florida long after they leave. The Internet and, of course, mobile devices have allowed those visitors to continue looking at the Southwest Florida real estate market, checking the listings and keeping in touch with agents all summer long. I expect to see that trend move into this June as well, as our snowbirds have been snatching up homes in this market all season long.

    Additionally, summer buyers are a little different as well. These are buyers who have been monitoring the market all season. They’ve looked at different neighborhoods, amenities, home prices, and the market stats. These folks are now serious buyers who are at the jumping off point. And, these buyers don’t necessarily have to be in Southwest Florida. If you remove your home from the market now, you’re likely to miss these serious

    buyers. You’ll also miss the decrease in inventory available, which can be helpful in seeing increased showings and activity.

    You may also be inclined to ask your Realtor to remove your listing and just promote via word of mouth a.k.a. the "pocket listing." This too is the wrong thing to do for the reasons stated above AND because we know that over 95% of all real estate searches take place on the Internet. If you’re selling a home in Southwest Florida, not continuing your Internet presence is just an all-around a bad idea in any season.

    Lastly, if you’re thinking of selling your home and you’re looking for representation, now may be the time for me to toot a horn. Just recently myself and my team, Team Michael Burke / Coconut Point Team, was recognized as one of just five top national agent/teams who have excelled in business growth. Featured as the cover story in Keller Williams’ national publication, Outfront, our team was credited as growing our business from $9 to $24 million in production in just one year by applying solid business planning, economic principles, and offering the best in client marketing resources.

    Speaking of resources, here are some incentives and exclusive Coconut Point Team Tools and Resources to help you consider our team to represent you:

    • • First, be on the lookout for our updated email Market Report! Through our new and improved email Market Report, you’ll be able to review our messages and quickly access our featured listings, market reports, and quick links to various communities and all of our exclusive market tools below!
    • • Monthly Market Report. Let me present you with the most accurate data about your neighborhood including closed and active home sales.
    • • The Coconut Point Press. This is my widely-read and exclusive printed publication and online edition, where your home is prominently spotlighted.
    • • Elite Seller Feedback System – Take advantage of my sophisticated and exclusive system that provides valuable feedback from your showings via email, so you know what buyers are thinking.
    • • Interactive Home Illustration – Give buyers what they want to see with an interactive floor place and professional videos of your home!
    • • Superior Marketing Plan – Our marketing plan is unlike all others in this market! It will maximize exposure and get top dollar for your home.

    There is difference between marketing and just listing a property. I am sure you will agree after you check out our unique and aggressive marketing tools to get the job done for you weather you are buying or selling.

    Join our team today and let us help you achieve your objective, whether it’s buying or selling!

    If your not sure who to call, I’m confident that I can help you sell your property. Call me today at 239-498-7600 or email Michael@CoconutPointRealEstate.com

    Contributed by D. Michael Burke, P.A. Keller Williams Elite Realty 
    Michael@CoconutPointRealEstate.com / www.CoconutPointRealEstate.com

  • Now really IS a Good Time to Sell

    Posted Under: Home Selling in Bonita Springs  |  May 30, 2012 12:14 PM  |  67 views  |  No comments

    Now really IS a Good Time to Sell

    Honestly, I’m not just saying that. While many agents will say that, few have the information to back it up. InfrontSouthwest Florida, as well as nationally, we do have reasons to believe that now is a good time to sell. And, these reasons are not just because it is springtime! The weather does have some effect on home sales, however, a bigger influence on the housing market is the overall economic situation and its impact on buyers’ psyche. The point is that while it is the best time of year, there are other economic indicators that point to success in real estate sales now and in 2012 overall.

    To get the full picture, let’s take a look at 2011 first. Normally, the home-sale market in Southwest Florida stays busy until early June, when the market tends to slow down a bit for the summer. However, if you waited until spring to sell last year, you would have missed the best-selling opportunity of the first half of 2011. This was due to the expiration of the homebuyer stimulus package. The homebuyer tax credit program accelerated home purchases creating a mini bubble in 2010 that was followed by a significant slowdown in home sales.

    kitchenNegative economic news also played a big part in the sluggish home sales during most of last year generally speaking. The stock market was unpredictable, and the earthquake in Japan had repercussions for many industries. Plus, Greece was on the brink of bankruptcy, and the future of the European Union was in doubt. Bad economic news and massive uncertainty lowers consumer confidence. Buyers need to have jobs, but they also need to feel confident in their future to take on a major purchase like a house.

    Now, here’s a house hunting tip: The best time to sell is when consumer confidence is on the upswing. Right now, interest rates are low; unemployment is decreasing; the economic news is mild; and there are more buyers in our local market niche than there are sellers. A high-demand, low-inventory market gives sellers an edge. This is a bit of a different picture than last year.

    The Conference Board Consumer Confidence Index fell just a bit in March 2012 to 70.2, but was up sharply in February 2012. The improvement in consumer confidence in February 2012 can be contributed to less pessimism about current business and employment conditions and more optimism about the short-term outlook for the economy and job prospects despite a rise in gas prices. Interest rates are currently at historic lows and are expected to stay low for the rest of the year.

    Capital Economics, an analytics firm, expects the housing crisis to end in 2012 year partially due to lenderslanai 4loosening credit. According to Capital Economics, one indicator of loosening is that banks are now lending 82 percent of loan-to-value (LTV), compared with a low of 74 percent LTV reached in mid-2010. This means qualified buyers need less cash to buy, which should lead to more sales this year.

    Additionally, here is what leading economists in the national housing industry are saying:

    Doug Duncan, chief economist, Fannie Mae

    “Conditions are coming together to encourage people to want to buy homes. Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that homeownership is a more compelling housing choice.”

    Celia Chen, senior director of housing economics, Moody’s

    “The residential property market is recovering, as the factors underlying demand and supply strengthen. Even after accounting for unusual seasonal patterns brought on by the unusually warm winter, conditions have not been this strong since the government ended homebuyer tax credits in 2010.”

    Mark Vitner, senior economist, Wells Fargo

    “Existing home sales dropped 2.6 percent, but are up 5.2 percent from a year ago. While existing sales are down for the second consecutive month, we are likely continuing to see payback from increases earlier this year. That said, we could see one more month of disappointing data, but we still contend the recent declines are not indicative of the trend. Stabilization will become more apparent once we return to normal weather.”

    Mark Fleming, chief economist, CoreLogic

    “Since the peak in home prices, mortgages rates have declined and affordability has risen dramatically. Housing affordability is at levels not seen since prior to the early 1990s …While real estate professionals often say that “now is a good time to buy,” it is clear today that April 2006 was probably not a good time to buy, while now may well be the time.”

    These positive indicators combined with a drop in homes for sale at the end of 2011 and a decrease in unemployment may provide an opportunity for sellers in spring and summer 2012, provided their homes are priced right for the market.

    Right now, the Southwest Florida’s real estate market is experiencing a shortage of available listings. The number of properties placed on the market in March 2012 is the lowest for the month in nine years. On April 1, 2012, available inventory in the combined Naples, Bonita Springs and Estero market stands at 7,625 (4,106 condominiums and 3,519 single family homes). This is a 5% decrease from April 1, 2011 and is approximately an 8.9 month supply based on closings for the past 12 months.

    In Southwest Florida, buyers are ready to buy in all price ranges, thus sellers can expect a buyer for their competitively-priced home. In some cases, sellers are receiving multiple offers including some above their suggested list price. To take full advantage of the best time to buy or sell in Southwest Florida, be sure to find an agent who can help you navigate this market and get you top dollar for your home or help you find the home of your dreams in paradise.

    By D. Michael Burke, P.A. Keller Williams Elite Realty

    Michael@CoconutPointRealEstate.com

    www.CoconutPointRealEstate.com

  • Florida’s Shadow Inventory: What does it mean for Florida’s Recovery?

    Posted Under: Home Buying in Bonita Springs  |  May 30, 2012 12:10 PM  |  77 views  |  2 comments

    Just recently, the National Association of Realtors® (NAR) released its state-by-state shadow inventory report. Florida has the highest number of bank-owned property at an estimated 441,000 units. California comes in second with 228,000 units. Illinois has around 124,000 bank-owned properties and New York is holding about 107,000 REO units according to the NAR report. These are the only states holding shadow inventory in six figures.

    What does this shadow inventory situation mean for Southwest Florida? Is it truly the catastrophe on the horizon or is it just the nature of our market’s recovery? The point is before we make that decision, let’s examine the facts.

    First, regarding the recent report from NAR…on the shadow-inventory[1]report, they divided the inventory in each state by the monthly number of distressed sales with a discrepancy in the length of time it would take to clear the inventory. Most of the shadow inventory is expected to clear in 24 months or less at the current rate of absorption. However, the growth in the shadow inventory is attributed to the slow-down in REO sales last fall because of the robo-signing scandal.

    It is worthy to note that the shadow inventory seems to be depleting quicker in the hardest hit states, such as Florida, Arizona, Nevada, and California. These four states represent 42% of all the foreclosures in the country. Florida, according to the NAR, will take 21-30 months to clear the backlog of REO property. The term “shadow inventory” hangs over the real estate market, suggesting a catastrophe looming in the near future.

    However, a recent white paper written by Florida Realtors Chief Economist, Dr. John Tuccillo, suggests that we’re overreacting about shadow inventory. Dr. John Tuccillo was the former chief economist for the National Association of Realtors® (NAR) and a highly respected business and planning consultant. He has since joined Florida Realtors® as chief economist and head of its new Industry Data and Analysis department.

    In his recent whitepaper, he states “the fear is that the inventory of delinquent and foreclosed loans will be released onto an already weakened market. But, the reality, even in Florida where distressed properties make up a significant portion of the market, appears to be different.”

    Tuccillo says lenders have no reason to flood the real estate market with more homes if doing so would drive prices down and impact the lender’s profit. Some think that lenders were holding back on purpose, but Tuccillo says that’s not the case. In fact, he states that the large number of distressed properties on hold was “largely the result of confusion over the rules of the game, and thus missteps by the lenders.”

    In conducting an analysis, Florida Realtors® Research looked at data from MLSs around the state and data provided by CoreLogic, a statistical analysis company. They looked at the recent history of distressed property listings and transactions relative to normal market data, as well as estimates for the shadow inventory, and came to some conclusions about the likely course moving forward.

    Here is an overview of their findings:

    · Florida remains one of the nation’s hardest hit states for distressed property sales.

    · Distressed property sales and listings have declined since late 2010, except for single-family-home short sales.

    · Average prices for distressed and normal property sales have been stabilizing.

    · In general, Realtors and lenders have learned how to cope with distressed properties in a way that stabilizes the market.

    · Florida’s highest percentage of distressed property (compared to total listings) occurs in the I-4 corridor and Southeast Florida; the lowest percentages occur in Northwest Florida.

    · Currently, Florida’s shadow inventory was 550,000 units at the end of 2011, a decline of about 9 percent from its peak in the first quarter of 2010.

    · Currently, the flow of new seriously delinquent (90 days or more) loans moving into the shadow inventory is offset by the roughly equal flow of distressed sales (short sales and REOs).

    · The number of foreclosures and REOs was significantly lower in February of 2012 than one year earlier, suggesting slower shadow inventory growth.

    Tuccillo also predicts that distressed properties will be a significant feature of the Florida real estate market over the next ten years, but it will be considered just one property type a buyer can consider – one that has its own unique sales techniques and documentation.

    So, what about the shadow inventory of distressed properties that are coming down the pike?

    There is a backlog of distressed properties coming to the table for sale, but based on our market’s recovery and Tuccillo’s findings, there is less guessing about how these sales will affect our market.

    Some other facts to consider are the number of units going back to lenders in 2012 has been much lower than a year ago suggesting that shadow inventory is slowing. And, lenders know that a loss taken on a short sale is typically less than that of foreclosing on the property. Thus, lenders are working with agents as never before to expedite short sales, thus helping to better stabilize prices.

    So, is shadow inventory really the black cloud hanging over us or just another piece of the real estate recovery process? It seems to be just another type of transaction available to home buyers. These days, buyers are focused on finding good properties at a fair price as opposed to picking up distressed properties as cheap as possible. And, with inventory declining, home buyers are searching for properties in every price point.

    In Southwest Florida, buyers are eager to buy and shadow inventory will not deter them.

    Sellers who know this will sell their properties quickly; now is not the time to postpone putting your home of the market! Don’t let the talk of shadow inventory keep you from making a solid real estate purchase or from getting your home on the market. As always, get a great agent who understands the facts and not the myths – if you do, you’ll get what you’re after in the Southwest Florida real estate market!

    By D. Michael Burke, P.A. Keller Williams Elite Realty

    Michael@CoconutPointRealEstate.com

    www.CoconutPointRealEstate.com

 
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