Jacksonville Florida Real Estate

Myth: You Can't Comp Regular Resales with Jacksonville Short Sales and Jacksonville Foreclosures

Are Jacksonville short sales and Jacksonville foreclosures comparable to straight Jacksonville FL resales?

Yes.  

Say that again?

Yes.

As we are in the fifth year of the real estate market downturn I would have assumed that this would be common knowledge.  Working in Jacksonville short sales and Jacksonville foreclosures like we do, our team is always surprised with this myth is resurrected.  

It usually happens something like this...

"Your listing on 123 Short Sale Lane is only worth 300,000 because regular resales have been going for $350,000 and this is a short sale..."

 

or like this...

 

"Of the 10 homes that closed in the last 3 months in Ponte Vedra community A--the smallest had 3500 square feet -- I have emailed you the the MLS listings for those solds-- only one of them was a short sale.  "

Please take note.  It doesn't matter if you are bidding on a foreclosure or short sale...you can not discount the price solely for that fact...then use that as an excuse for a low offer.  Jacksonville home values incorporate all types of sales (assuming they are arms-length transactions).

Fair market value is what matters!  The bank will order an analysis of fair market value, whether that be a BPO or an appraisal.  When an appraisal is done, they are not going to discount for the fact that a home is a Jacksonville foreclosure or short sale.  They are going to compare apples to apples...

 

Ponte Vedra Beach Short Sale Closing in Under 60 Days- Condominium with Wells Fargo Serviced Loan

Original Purchase of Ponte Vedra Beach Condo in 2006 - $185,000
Seller's Loan Amount (2006 original amount) - $172,000
Sales Price  - $100,000 (First offer received $90,000, but we got the purchase price up $10,000 more) PLUS Buyer paid delinquent condo dues!
Seller Concessions - $0
Seller Cash Contribution - $2,500

Short Sale Approved by Wells Fargo in only 48 Days!!!  Sellers had only missed one payment!

Wells Fargo waived the right to pursue a deficiency in writing.

If you are a Jacksonville home owner who owes more than your Jacksonville home is worth, you are not alone.  Most Jacksonville FL real estate sellers we talk to these days are in the same situation.  This particular Jacksonville home owner had a growing family who had outgrown their living space.  We helped them find a new home in St. Johns County, in a new home community, that we helped them purchase from a builder.  They planned on leasing out the condo after they moved into their new home.  After the closing of their new home, they were denied the right to lease their condo by the association.  They had no choice but to try to sell their Ponte Vedra Beach condo.

We were able to help them sell their Ponte Vedra Beach condo for more than fair market value (highest comp in community in the past 6 months).  We were able to help the sellers get out from under the burden of two home payments and move on with their life.

Who you choose to work your Jacksonville short sale can make a huge difference.  Select someone with experience who knows how to get the job done.  Just because someone took a class in short sales, or calls themselves a short sale expert, does not mean that they are.  You can only learn to successfully work short sales with experience.  Jacksonville short sales are very challenging real estate transactions.  They are never easy, and the bad ones are nightmares with seemingly endless obstacles that must be pushed through and problems to be solved.   If you choose the wrong agent to help you through the Jacksonville short sale process, you may end up far worse than you started. 

 

Wells Fargo Approval Letter for Jacksonville Short Sale

We got this Wells Fargo short sale approval in under seven weeks!  It is on a Ponte Vedra Beach condo that had decreased in value to roughly half of it's 2006 purchase price.

Terms of the approved Jacksonville short sale:

• No promissory note
• Wells Fargo agreed to waive all deficiency rights
• Initially Wells Fargo was requiring $5,000 seller contribution or a $12,000 0% interest promissory note to be paid back over ten years.  We got the number down to a $2,500 cash contribution. 
• All closing costs covered by Wells Fargo.

Seller only missed one payment at the time of the approval, which was not yet 30 days late.

You can see this Jacksonville short sales / Wells Fargo short sale approval letter here.

Are you in a situation where you can no longer afford to keep your home?  Have you tried to work things out with the bank to no avail?  Call us for an honest evaluation of whether we think we can help you.

 

 

 

The Buyer Side of Jacksonville Short Sales. Why Short Sales Get a Bad Reputation.

Recent Jacksonville FL Real Estate / Jacksonville Short Sale Scenario:

• Buyer fell in love with a Jacksonville short sale property he found on the internet. 
• Spoke with the listing agent at length.  He said a BPO had been done and he knew exactly what the bank would accept.  WHICH WAS THE LIST PRICE.
• We ran comps and spoke with the buyer who was comfortable proceeding with and offer for the price the bank needed based on the recent sales in the area.  The offer amount was for the list price.
• 4/22 We wrote the offer up, the buyer signed it and we sent it over. 
• 4/26 we were sent the contract back signed by the seller (signature date 4/25 after the offer had expired, however the buyer was still happy to proceed). The home went under contract and was placed as contingent in the MLS system.   The seller's agent stated that he was going to send in the contract to the bank that day.
• 5/6  We checked in with the seller's agent, asking if he had heard anything back yet on the short sale.  The response back was that all documents were submitted including the HUD-1 and that he would update us.
• 5/9  Seller's agent sent us a message back from BOA saying that the file had been assigned to a negotiator.  However, upon scrolling down and reading the whole e-mail we discovered that the short sale package wasn't even submitted to Bank of America until 5/6 the day we first inquired about the status and ten days after we were told it was being submitted.  (If you are familiar with Jacksonville short sales, you know that you can't afford to "waste" any time before getting everything in because of how lengthy the process can be.)
• 5/11 Listing agent forwarded us a response from BOA.  They were demanding a sales price of approximately $25,000 higher....FAR MORE than the home was worth!  The listing agent asked the bank if a new appraisal could be done.  He/she was told no because the appraisal didn't expire until the next month.  
• Upon the demand for above-market-value on the home, the wise buyer decided to select a different home instead.  But this buyer, who was sitting on a lease that was running up fast, was out a couple of weeks on a short sale that the listing agent should have either known was not going to happen, or had a game plan to try to work around the appraisal that he had to have known about.

This situation could have been much worse.  We could have gone on for months in this contract without knowing that it was a "dead end" for the buyer.  The worst case scenario is when a Jacksonville short sale buyer waits for month and month on end, forgoing many other opportunities, to only find out that they are not going to get that house.

We love helping sellers sell their Jacksonville homes.  We don't mind taking Jacksonville short sale listings, like many agents do, because we know how to successfully close a Jacksonville short sale.  We also appreciate the opportunity to help sellers sell their Jacksonville home and take a step forward to financial recovery.

Helping Jacksonville FL real estate buyers purchase short sales can be a little trickier.  Not because we mind getting helping a buyer purchase from a seller in need...we love that part of it.  It is very challenging on the buyer agent end of a short sale.  When we have the listing, we have control, and know that the Jacksonville short sale is being worked correctly.  We know how to work through "no" to get to a "yes."  We know how to attack, and keep attacking the challenges that pop up when you are listing a short sale.  With a buyer who wants to purchase a short sale, we don't have this power or control of the situation. 

Buyer agents who have a buyer that wants to purchase a short sale have limited, to no, control of the situation.    We can get an approval on almost any short sale when we are working for the Jacksonville home owner.  When we are representing a buyer, it's a toss up.

It is so important to hire the right agent to represent you in the current Jacksonville FL real estate market.  The current environment of the market is anything BUT business as usual.

 

 

Jacksonville Real Estate Market: February 2011 Jacksonville Home Sales Show Distressed Sales at 62% of Sales

 

The preceding is a graph of February 2011 Distressed Sales in the Jacksonville real estate market.  (Jacksonville foreclosures, Jacksonville pre-foreclosures and Jacksonville short sales) vs.  Straight resales by owner (non-builder, non-bank) as entered in the Jacksonville MLS system

February 2011 Jacksonville Real Estate Market Statistics

• Total Jacksonville Real Estate Sales - 840
• Jacksonville Foreclosures Sold in February - 338  (40.2% of all Jacksonville real estate sales were foreclosures)
• Jacksonville Short Sales/ Jacksonville Pre-Foreclosure Sales - 138  (16.4% of total real estate sales)
• Jacksonville Distressed Property Sales - 476 (56.7% of all Jacksonville real estate sales!!!)
• Jacksonville Sales that were not Distressed Property Sales - 364
• Jacksonville Builder Sales /New Homes - 73  ( 8.7% of total sales recorded in the MLS for the month.  This does not include builder sales that were not recorded on the MLS.  The number could be quite a bit higher)
• Straight Resale Homes Sold in Jacksonville - 291  (34.6% of total Jacksonville Real Estate Sales)

 
 
The preceding chart shows February closed sales of Jacksonville real estate listed on the Jacksonville MLS system by type. 
 

 

Jacksonville Short Sales. Carrington Turned Down Short Sale, Home Now Listed as Jacksonville Foreclosure for 84% of Our Jacksonville Short Sale Contract Price!!!

ARE BANKS IN THE BUSINESS TO LOSE MONEY?  

Of course not!  Right?  Read on.... 

Jacksonville Short Sale Transaction Facts:

• Jacksonville Short Sale Contract Date - May 2009
• Contract Price for Short Sale - $237,500
• Appraised value of the home July 2009 - $240,000
• Carrington's Demand for Purchase Price on the Jacksonville Short Sale - $255,000 (!!!) Which they admitted was above fair market value.    SEE CARRINGTON'S REJECTION OF THE JACKSONVILLE SHORT SALE HERE.
• Buyer walked at the end of August 2009.


Servicer / Loan Originator / Investor Facts:

• Servicer - Carrington Mortgage Services (CMS)
• Original Loan Originator - New Century Mortgage (You can read about the lawsuits they disclosed to the SEC in 2007 here.)
• Investor Type : Mortgage Backed Security
• Investor's Trustee -  Wells Fargo
• Investor on Loan -  Carrington Mortgage Loan Trust, Series 2006-NC3 (no filings were found with the SEC since 2007 when they filed a Form 15 (under Rule 15d-6) representing they had fewer than 300 security holders of record) and the subsequently filed 10K.

House currently on the market as a Jacksonville foreclosure / Jacksonville REO for only $199,900.

 So not only have they lost almost two additional years of payments, but the bank/investor/trustee priced the home now that is an REO at only 78% of their above-fair-market value demand back in 2009.

Why?  Why turn away a ready, willing and able (and eager!!!) buyer to only hold onto an asset (in this case a home with a loan that had gone bad,  that they had to take back as an asset) in a declining market and lose an additional $40,000?  Is this in the best interest of the investors?   Insurance companies?  The sellers who are awesome people that were trying to do the right thing?  The taxpayers who keep throwing money at the banks through no decision of their own?

Are banks really in the business to lose money?  Why would they refuse a fair-market-value offer then wait two years to put the home on the market for approximately $40,000 LESS than what we had for them through our Jacksonville short sale?

This is not an uncommon event.  Who wins  when a Jacksonville short sale contract is rejected then the home goes back to the bank...then is listed for far less?

Jacksonville Real Estate: What Percentage of Asking Price Should I Offer On Jacksonville Foreclosures, Jacksonville Short Sales, Jacksonville Resales or Jacksonville New Homes

Here goes....

ASKING PRICE IS JUST NOISE.

Huh???

This is probably the most popular question we get regarding Jacksonville Florida real estate.  As a matter of fact we get tons of website visitors searching for the answer to this common question to apply to their offer to purchase.  The answer is, all the asking price should mean to you is it was an initial search parameter for you to see if you are interested or not.

So what matters?

What the Jacksonville home is worth.  The fair market value of the home is what you should be looking at.   If you are buying Jacksonville Real Estate, whether it is a Jacksonville Foreclosure, Jacksonville Short Sale, Jacksonville New Home or straight resale what you should be looking at is the value of the home in comparison to those that have recently sold.  Also look at what else is on the market.  Is there a similar home you could get for less?  Much less? 

The fact is, some asking prices are just ridiculous.  Sometimes they are ridiculously high, sometimes the asking price is ridiculously low.   Sometimes the asking prices of Jacksonville real estate are exactly where they should be.

I'll give you an extreme example:

• Let's say a home is priced at $500,000
• Recent Comparables suggest the home is only worth $350,000
• Do you really want to apply some formula of ___% of asking price that you saw in some book or your neighbor/son/uncle/etc. told you about?
• Or do you want to look at the value of the Jacksonville Real Estate in relation to what the home is worth?
• You WILL overpay if you make an offer in relation to asking price. (ie a certain percentage off of asking price)

Another example:

• Say there is a Jacksonville foreclosure / REO priced at $150,000
• Recent Comparables suggest the home is worth $200,000.
• Do you really think you are going to get the home if you offer some formula of ____% off of asking price...just so you feel like you get a good deal?
• In this scenario you could offer 125% of asking price and you would still get a pretty good deal...right?

If you are a Jacksonville buyer hoping to pick up a Jacksonville foreclosure or Jacksonville short sale this  is especially important.  In the Jacksonville foreclosure situation...there are many, many buyers hovering just waiting for that good deal to come up.  It is rare that we put in an offer on a Jacksonville foreclosure property that we don't find our buyer up against some multiple offer competition.  In a Jacksonville short sale, the bank is going to have either an appraisal or BPO that will give them a value of the property.  We are not seeing the banks let go of the properties in Jacksonville short sales for much, if anything, under what their belief is of fair market value.  (The bank's belief of fair market value of that short sale?  Another blog post for another day....)

If you are looking to buy a home in Jacksonville Florida...focus less on what asking price is and more on what you should be paying for the home based on what it is worth in today's real estate market, what your intentions are for the property (Long term?  Short term?) and how comfortable you are with potential future declines in the fair market value of the property. 

Jacksonville Short Sales and Jacksonville Foreclosures are Performing Really Well.

Jacksonville distressed properties are here to stay.  Jacksonville short sales and Jacksonville foreclosures are usually priced so well in the Jacksonville real estate market that it is pretty hard for many homeowners, who hope to accomplish a straight resale, to compete.

Around 56% of the pending contracts in the Jacksonville Real Estate market are on distressed properties.  Straight resales account for only 31% of the pending contracts. 

The simple reason is price.  Most sellers who purchased their home in the past several years can not compete with the short sales and foreclosures on price.  This leaves them forced to become a Jacksonville short sale themselves if they are in a situation in which they have to sell their home.

In a short sale the seller owes more than their home is worth.  We get a contract on the property for what the home is worth now that is subject to the lienholder's approval.  That gets submitted to the lender who evaluates the complete situation and decides whether to release the lien and allow the sale to take place.  If the lender agrees, the closing takes place and the seller no longer owns the home.  Depending on the lender, the circumstances and the type of loan they may do a lien release only or possibly forgive the remainder of the debt.  

January 7, 2009 Jacksonville Florida Real Estate Market Update

Currently we have 12.83 months on inventory for single family homes in the Jacksonville real estate market area.  We began 2008 with 10.66 months of inventory in the Jacksonville market.  The inventory went way up this past summer and fall...to a high of around 14 months, so the inventory has come back down.  Jacksonville Condos have an 18 month inventory currently.

In recent months we have seen some DRAMATIC price decreases in the Jacksonville market.  This has been due to the increase in foreclosures.  Banks have been creating new bottoms regularly and rapidly with foreclosures.  The percentage decrease has been remarkable in some neighborhoods.  Some neighborhoods are seeing home values around 50% of what they were selling for in 2006.  I am working on an analysis of a particular neighborhood so I can outline how it is unfolding to draw a picture for home buyers and home sellers.  I am amazed daily by prices homes are being listed for.

The banks bringing dramatic decreases to housing prices is just feeding the cycle.  When a bank does this, it makes it harder for their other homeowners with loans to sell their home when they need to.  Which forces a short sale.  If the short sale doesn't work out, then eventually it will lead to foreclosure.  This leads to further reductions in the price.  What I am observing is that the foreclosures that are coming on the market in the areas I follow closely are coming on dramatically under recent comps and current competition.  I have to ask, is this necessary to get the home sold?  The banks continue to complain about losses, however, does this behavior not magnify the losses? 

We deal with banks regularly with all of our short sales and we are amazed constantly by the decisions being made.  It's a great time to buy a home and take advantage of the lack of organization in the industry and get yourself a phenomenal deal before the before the problem begins to correct.

There are over 10,000 listings to chose from in the Jacksonville real estate market.  Here is the important part...2,645 of the 10,000 are distressed properties!  These Jacksonville Short Sales and Jacksonville Foreclosures are value priced and some are steals, listed at prices that we haven't seen in years and years.  It is such an exciting time to be a Jacksonville home buyer!

Now a few more Jacksonville real estate market stats for you:

• 54% of the Jacksonville real estate listings (non-condo) currently under contract are distressed properties!  This is where the market is.  Straight home sellers are generally unable or unwilling to compete with the incredible pricing on these things.  About 55% of these pending listings are Jacksonville short sales and 45% are Jacksonville foreclosures. 

• The Pending to Active ratio in the Jacksonville real estate market is 13.85% today for the overall market.  For the distressed properties, the pending to active ratio is almost 30%...a much healthier ratio than for the overall Jacksonville real estate market and much closer to a balanced market.

• 33% of the sales in the past 30 days in the Jacksonville Real Estate Market are short sales and foreclosures.

• 22% of Jacksonville real estate sales in the past year have been Jacksonville distressed properties--both short sales and foreclosures that have sold.  AT THE END OF 2007 THIS RATIO WAS ONLY 6%! 

• There have been 9,748 homes sold in the Jacksonville real estate market (non-condo) in the past year. Last year at this time we were at 12,664 sold in the prior year.  This same week in 2007 we were around 17,000 homes sold in the prior 12 months.  For the same period ended 1/07/2006 we were double what we are today.    This is a very positive number because it appears that this number has stabilized and is no longer decreasing.  It has remained stable throughout the summer and into the fall and winter.  This statistic indicates that It is highly possible that the Jacksonville real estate market has bottomed in the number of transactions closed.  A very positive statistic that I will continue to keep my eye on and keep you posted.

Banks “working with people”, are they really?

We are constantly bombarded with "news" about how banks are working with people. This is a frustrating issue for everyone. Some are frustrated because they don't like the idea. Others are frustrated because they know their banks are not working with them. We have met with so many nice, honest people who have had a significant change in their circumstances that simply can't get any help from their banks. We've encountered some great people, people with previously wonderful credit scores that had never imagined not being able to make their mortgage payments that just can't make them anymore due to changes in circumstances.

We've seen people who've had their income cut in half, income cut off totally and can't find a new job, lengthy illnesses and other devastating circumstances that had no problem paying their mortgages until their circumstances changed dramatically. Now they can't pay, and the banks are not working with them, even though we hear the "reports" about how banks are assisting people.

Here are a couple of examples:

Honest hardworking family with three kids, father had high paying job for a national builder for years. National builder laid him off due to tremendous builder slowdown in the real estate market. The father tried to find a new job, nothing was available. Bank offered to waive their payments for a couple of months and put it on the end of the loan. Father still could not find work after that period of time. No further assistance. The family had to leave their home and move in with relatives.

Honest hardworking family with three small kids. They moved to the area for the father to work for a big national company, soon after there was a big round of layoffs. The father found another lower paying job, sometimes working multiple jobs to make ends meet. The father got a devastating illness that resulting in a lengthy hospital stay and resulted in a disability. The father tried to find work he could do. The bank did a "refinance" that took the back payments and put them on the end of the loan, but did nothing to make payments more manageable. Ultimately the family had to pack up and leave their home. They are living in low income housing in another state while he works in retail.

Very common example:

Honest, hard-working family calls up the bank for help due to a reduction in income and the bank says "we can't talk to you about helping you unless you are 2 months behind" even though the homeowner is about to fall behind. When the borrower questions the bank about what will happen at the two month mark, the bank tells the borrower that they don't know…they may or may not get help.

We encounter heartbreaking stories regularly. In a strong seller's market, this probably wouldn't be too large of a problem for anyone in these situations. They could simply put their house on the market, sell it fast, and get out. This would allow them to find something more manageable for their current circumstances. That, unfortunately, is usually not an option in a strong buyer's market, unless they attempt to sell it short. Some people simply throw up their hands and give up, never even trying to short sale their home.

Please do not quickly assume that those who can't make their payments are "deadbeats" or "got in over their heads" or were "speculators". While this is absolutely true for many, (and this article is NOT about this group) it is simply not the case for so many people in our area now.

If you are in the market to buy a home, please do not let anyone talk you out of looking at short sale properties. Short sales are a win-win for the buyer and seller. Short sales are not impossible, as so many agents would have you believe. However, they ARE harder work for the agent. If you correctly purchase a short sale property you will be getting a home below market value. At the same time, the seller is able to get out without the stigma of a foreclosure. Both parties win.

If you are interested in getting a home below fair market value in a short sale, give us a call. We know how to work short sales, we are not afraid of them, and can help you get great deal in this buyer market!

Short Sales might be your best route to a great deal!

The horror stories surrounding short sales are rampant.

"You'll wait 4 months, then have to start over and find something else."

"Short sales never work."

"You shouldn't mess with short sales."

"Short Sales aren't good deals."

If you have heard any of the above "rumors" don't rely on them.  A lot of the negative press about short sales have originated because of a general lack of knowledge by real estate professionals and the public.  I think overall everyone is more educated now, however, a lot of the damage has been done.

If you are looking to get a good deal and have time on your hands to wait, you should not let anyone guide you away from pursuing a short sale opportunity.

The people who should not attempt to purchase a short sale:

• Buyers who have to be in something soon. (You should never expect a short sale to close in less than 6-8 weeks.  Sometimes longer.  If it is faster than that you will be very fortunate.)
• Buyers who lack commitment to see it through to the end. (Short Sales WILL take longer.  Everything is dependent upon that 3rd party approval which sometimes takes weeks.  Your life WILL be on hold. )
• Buyers who are looking for a steal. (Banks will not allow "steals")
• Buyers who are not totally qualified to purchase a home. (You are dealing with sellers who are usually facing foreclosure.  It is wrong to tie up their house while they head closer to foreclosure if you can not buy or will not commit 100% to waiting for the bank.)

If you have the patience to wait to get a good deal, then short sales are for you.  Be sure you work with a buyer's agent who is experienced and well versed in short sales or you could become part of a horror story.  Short sales are not easy.  However, for the buyer who sticks it out, you can get a really good deal.  If you are interested in purchasing a short sale property, we can help!

Popular Short Sale Myth #1 in the Jacksonville Real Estate Market

   

We are short sale specialists and get quite a few calls on our Jacksonville and St Augustine short sale property listings asking us what the bank will take. Until we have an offer, we do not know what the bank will take if it is less than what is owed on the home. Any home going on the market should initially be priced at fair market value. In a short sale this is done regardless of what is owed on the property. It's not in the bank's best interest to take the home back if they can get a good fair offer from a qualified buyer.

   

What the bank will take depends on where fair market value is for the home at the time the offer comes in. The bank is going to want to get as much as possible from the property and as close to fair market value as possible. The correct strategy is not to submit the offer at a price that is a "steal" for the buyer. The bank has already lost out, and to get approval on a short sale you need to offer the lowest possible price that the bank can't refuse.

   

If you are interested in purchasing a short sale home in northeast Florida, the first thing you need to do is hire a GREAT Jacksonville/ St Augustine area real estate agent trained extensively in short sales. A properly trained short sale expert can save you a great deal of hassle, although no one can eliminate all of the hassle. It's the nature of short sales.

   

If you are interested in selling a home and you owe more than the home is worth, don't even consider using someone who does not have highly specialized training in short sales. The short sale process is a very detailed, complicated process that should only be trusted to an expert in the area of short sales.