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CHINESE DRYWALL TRIAL AIMS TO SET CONTROVERSY

March 9th, 2010


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By Jennifer Maldonado jmaldonado@adachere.com

According to a recent article in the South Florida Business Journal, there are hundreds of millions of remediation dollars on the line as the first federal trial in the Chinese drywall fiasco opens in New Orleans. Lawyers, insurance companies and homebuilders closely watch as the decision will be made whether the homes infected by Chinese drywall must be gutted completely, or if other less costly fixes will do. The companies that actually distributed the Chinese drywall are proposing the cheaper fixes for the problem.

A Chinese drywall manufacturer, Knauf Plasterboard Tianjin, entered the case and proposed the bad drywall could be fixed with air filtration systems or chemically treated to neutralize the bacteria. Others however, disagree. It is argued that the homes must be completely stripped of all the drywall and be rebuilt only after the home has been aired out.

The trial that began this week, will settle the disagreements and the outcome will be very dramatic as billions of dollars are on the line. Five hundred million pounds of Chinese drywall were shipped into the US from 2004 to 2006.

In today’s foreclosure market, you will certainly come across homes with that drywall. They are still being sold as foreclosures, and usually the price is heavily discounted to reflect it. Anyone knowingly purchasing a home with Chinese drywall should be warned that it has concentrations of sulfur and other substances that produce gases, foul odors and can eventually lead to corroded metal and piping.

That being said, there are many homes that are priced well without the drywall issues, so follow the lines of an educated decision is the best decision. Using the help of a professional real estate agent is the best way to get started.

For a list of all available foreclosures in South Florida, please visit www.adacheREO.com. For commercial real estate opportunities, and real estate bulk sales in Florida, visit us at www.AdacheREO.com/bulk.

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THE FORECLOSURE PROCESS COSTLY FOR THE BANKS

March 5th, 2010

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By Ian Wolinsky
iwolisnky@adacheRE.com

To repossess a South Florida residence, a lender must undertake what surely has become a lengthy and costly legal process. In the past here used to take about six to nine months and cost the institution between $40,000 and $80,000 per property. But that was before the tsunami of filings that hit the courts beginning in 2008 and continuing into the first quarter of 2010. In addition to that, many lenders do not even file the initial foreclosure paperwork until a borrower is at least 90 days late on regularly scheduled mortgage payments.

When the foreclosure is finalized and the lender takes possession of the property, the bank inherits the responsibility of settling any outstanding liens on the property that live on after the foreclosure, such as property taxes, past-due condo association maintenance fees, and open permits. In many cases these fee’s can be enormous, especially in light of the time it is taking and the debt that accrues.

If one were to study the foreclosure scenario and compare the realities to a short sale; where a borrower who owes more than the property is currently worth brings in a buyer to pay the current market value for the distressed property, while still would incur a loss for the banks, at least these losses could be predicted, especially if the offer is contingent on a specific time period so as to avoid the accruement of debt on the property.

A lender can complete a short-sale, and remove a distressed property from its assets in a matter of weeks without having to invest the additional dollars that would otherwise have to be realized under the aforementioned foreclosure reality.

County By County

Miami-Dade County experienced the steepest drop in foreclosure actions, dropping 30 percent to 1,670 cases in February 2010 compared to 2009. Broward County experienced a minor decrease, falling only seven percent to 3,188 foreclosure filings in February compared to the previous year. Palm Beach County experienced a 24 percent drop in foreclosure filings in February 2010 to 1,822 compared to 2009.

For a list of all available foreclosures in South Florida, please visit www.adacheREO.com. For commercial real estate opportunities, and real estate bulk sales in Florida, visit us at www.AdacheREO.com/bulk.


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SOUTH FLORIDA FORECLOSURE FILINGS: THE GOOD THE BAD AND THE UGLY

March 2nd, 2010

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By Ian Wolinsky iwolisnky@adacheRE.com

The numbers are out for recent foreclosure filings in the three counties that comprise South Florida-Palm Beach, Dade, and Broward; and while the numbers may show a decrease in overall filings, they still reveal what many industry experts have been stating all along: the numbers shall continue to grow.

Lenders filed 19 percent fewer foreclosure actions in South Florida in February than compared to statistics from the year prior. Still the current rate of defaults for the month averages out to 239 filings per day in the tri county area. Lenders filed 6,680 foreclosure actions in February 2010 compared to 8,200 actions in 2009 and 5,500 actions in 2008, according to court papers.

While the rate of foreclosure filings (Lis pendis) is slowing in 2010, this reality still remains a huge hurdle for lenders and an opportunity for savvy educated buyers.  Lenders are increasingly coming to the conclusion that short sales - where a property is sold at a price that is short of the existing mortgage amount - is strategically and financially advantageous method of unloading troubled assets than actually foreclosing out on a borrower.

In the latest sign that the worst of the recession still hasn’t let up in South Florida, existing home and condo sales dropped by upwards of 37 percent in the first month of 2010. The numbers from Florida Realtors also indicated a decline in the median sale price of homes.

According to Court records and the local Realtor Associations, home and condo sales in Miami-Dade declined 30 percent in January. But, compared to one year ago, home sales were up 7 percent and condo sales, 42 percent.

Broward County saw similar numbers to Miami-Dade. New home sales dropped 37 percent and median values dropped 15 percent to $180,000. Condo sales in Broward County were down 18 percent from December, but were up 47 percent compared to January 2009. Home sales were up only 5 percent compared to January 2009. On the national levels, according to the National association of Realtors, home sales dropped 7.2 percent from December 2009 to January 2010.

For a list of all available foreclosures in South Florida, please visit www.adacheREO.com. For commercial real estate opportunities, and real estate bulk sales in Florida, visit us at www.AdacheREO.com/bulk.

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WALL STREET VERSUS MAIN STREET

February 19th, 2010

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The foreclosure fight between lawmakers and bankers has made its way to Florida. According to www.floridarealtors.org, lawmakers are pushing a proposed “Foreclosure Bill of Rights” while Florida Bankers are trying to do away with legal proceedings in foreclosures altogether.

It was recently announced that the Senate released a “Homeowner’s Defense Legislation”, which includes clauses to renegotiate home loans and to require mediation prior to eviction. This legislation was filed in response to the Florida Bankers Association and would create a system that speeds up foreclosures to 90 days.

These differences of opinions create quite the controversy. For example, condo associations and homeowner associations believe the current foreclosure processes are taking too long. Also, homeowners are not taking care of their property during this time. Homeowners under foreclosure often times stop paying their condo or HOA fees. This, in turn, causes paying homeowners dues to be affected.

Banks on the other hand, are taking 12-24 months to foreclose on a property. Courts are becoming backlogged from all the foreclosure cases on the books. Despite this, Senate Rep. Darren Soto of Orlando stated: “We will not allow a half million Floridians to be kicked out on the street. We will not allow bailout, spend-happy banks to dictate our agenda here in Tallahassee, and we will not allow the trampling of rights of Floridians for mere convenience.”

Banks and legislature have to agree on a happy medium that will benefit both voters and bankers. Owners who got into trouble because of greedy lenders need a break and banks who are trying to recover their assets need to be able to do so in order to remain viable. Speeding up the process will be key for the market to reach its true level, which is not as high as it was three years ago nor as low as it is today. Everybody is learning as they go.

For a list of all available foreclosures in South Florida, please visit www.adacheREO.com. For commercial real estate opportunities, and real estate bulk sales in Florida, visit us at www.AdacheREO.com/bulk.


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SHORT SALES AND FORECLOSURES IN SOUTH FLORIDA KEEP THE MARKET BUSY

February 16th, 2010


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A recent story by the South Florida Business Journal revealed that during the three month period ending on January 31st, the sale of distressed property in Miami-Dade and  Broward counties, grew 35%, year-over-year. The main reason stated for such stat was the increment in the number of buyers looking for bank owned properties (REOs) and short sales. This is what customers ready to purchase are looking for.

Spelled out in very simple terms: Opportunities are what drive the real estate market during this time of economic recovery.

For those wanting to take advantage of this market but not familiarized with the terminology, the main concepts to have in mind are “REO” and “short sale”.

Foreclosure or REO properties are houses and/or condos the banks have already taken from homeowners who have defaulted their mortgages. This means the banks are now sole proprietors of such properties. Since the bank’s business is with money and not with brick and mortar, it places these properties for sale at significant discounts in order to make them very attractive and move them quickly (a list of all available bank owned properties in the Miami-Dade, Broward and Palm Beach counties can be found at www.adachereo.com).

Short sale is when and owner realizes he can’t pay for his mortgage and instead of fighting it with the bank, both parts agree to sell off the asset at a lower price. Usually the bank ends up losing money on the deal but it saves by not having to go through a legal battle with the owner. Even though great prices can be achieved through this process, it is important for consumers to know that short sales takes longer and it is generally speaking a more complicated transactions than an REO or foreclosure. It is a cleaner process for the bank but a prospective buyer with an offer on the property may be left in limbo for a while. It is not uncommon for an offer to be placed and have six months go by and then hear that it did not happen.

It is interesting to know that currently more than half of single-family home sales in Miami-Dade and Broward Counties involved a bank-owned or short sale transactions, so your housing Dollar can be stretched enormously if you purchase a property right now. $100,000 today will go way farther than those same $100,000 in 2004. 2005 or 2006.

For a list of all available foreclosures in South Florida, please visit www.adacheREO.com. For commercial real estate opportunities, and real estate bulk sales in Florida, visit us at www.AdacheREO.com/bulk.

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CURRENT REAL ESTATE PRICES SPELL “OPPORTUNITY” IN SOUTH FLORIDA

February 12th, 2010


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A recent story by the South Florida Business Journal stated that South Florida’s home values remained depressed during the final quarter of 2009. While the number of home sales kept rising, prices kept going down. According to last month’s report by Florida Realtors, existing home and condo sales in 2009 rose 31% over the previous year. At the same time, median price on those properties was $142,600, down 24 percent from 2008.

The main reason, as we all know, is that the quantity of foreclosures flooding the market is creating an ever-growing surplus of inventory of properties that needs to be absorbed by the marked before the water returns to normal levels. A basic rule of economy tells us that the more availability, the lower the price. The lower the price, the farther your dollar goes when purchasing a home, either to live in or as an investment.

The previous paragraph can be summarized in just one word, a great word: Opportunity.

A recent study by a Seattle-based real estate website revealed the following:

  • Home values across the US declined 5%, year-over-year, in the fourth quarter.
  • Home values across the US declined 0.5%, quarter-over-quarter.
  • 48% of homes in South Florida sold for a loss in the fourth quarter of 2009.
  • The median list price was $240,000, down 3.61 percent, quarter-over-quarter.
  • Median sales price was $170,000, down 7.28 percent, quarter-over-quarter.

Experienced  investors all agree that timing the market not only is impossible, it is also a bad strategy and no one can do it. The time of opportunity is now! If for whatever reason, you are thinking of purchasing real estate in this market, you can’t afford to miss your opportunity while trying to wait to save a couple percentage points. You will recover them many times over once the waters return to their levels. And South Florida will always be South Florida. We’re not going anywhere!

For a list of all available foreclosures in South Florida, please visit www.adacheREO.com. For commercial real estate opportunities, and real estate bulk sales in Florida, visit us at www.AdacheREO.com/bulk.


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HUD ADJUSTS TU SPEED UP RESALE OF FORECLOSURES

February 10th, 2010


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HUDStarting on February 1st, 2010 and in an effort to stabilize home values and improve conditions in communities where foreclosure activity has been devastatingly high, the Department of Housing and Urban Development (HUD) recently announced a temporary policy that will expand access to FHA mortgage insurance in order to allow for quicker resale of foreclosed properties. Such new policy will allow buyers to use FHA-insured financing to procure bank and HUD-owned properties.

As per current practices, FHA prohibits (with certain exceptions) insuring mortgages on homes owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader selection of recently foreclosed properties.

“As a result of the tightened credit market - said HUD Secretary Shaun Donovan - FHA insured mortgage financing is often the only means available to potential homebuyers. FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”

The waiver will be initially effective for a one year period. To protect FHA borrowers against predatory practices, such as flipping, the waiver is limited to those sales meeting the following general conditions:

  • All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
  • In cases in which the sales price of the property is 20% or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
  • For additional specifications, conditions and other details of this new temporary policy you can check the following kink: http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

For a list of all available foreclosures in South Florida, please visit www.adacheREO.com. For commercial real estate opportunities, and real estate bulk sales in Florida, visit us at www.AdacheREO.com/bulk.

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A PERFECT FIT

February 5th, 2010

small-house

By Jennifer Maldonado


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With the trendy foreclosure Market on the rise, homebuyers are starting to embrace the idea that less is more when it comes to square footage. According to Realtor magazine’s February 2010 issue, the average size of a new house decreased last year for the first time in nearly three decades. Although the average square footage of a new house is still double what it was in the 1960s, in the last year it decreased slightly to 2,215 square feet from a high of 2,277 square feet in 2008. This is the first drop in home sizes since the early 1980s.

As foreclosures continue to increase, more and more people are dumping their existing large homes for smaller bargains. Foreclosures are sometimes known as “fixer uppers” or homes that need TLC (tender loving care) due to the fact that some owners do not upkeep their home in the stages of foreclosing, and that some homes are vacant for a long period of time with no upkeep. During this time, fixtures and other home assets are often stolen from foreclosed homes either by the owner, a renter, or an outsider. Prices however, reflect this lack of care as well. Homes that are sold without kitchens, cracked tiles and chipped pavers are on the market well below the price of a comparable foreclosed home that was left in good condition and well under the price it costs to repair these items A smaller home at a great price can have a ton of character with not much more than a good coat of paint and some elbow grease!

If you find yourself downsizing, here are some things to keep in mind.

  • Keep your countertops cleared. Small kitchens can get cluttered very easily so hide things such as blenders, coffee pots and small appliances.
  • Do not decorate every inch of your walls. Keeping spaces on interior walls will open up the space and make it feel larger. Hang pictures or candle sconces with proper spacing and they wont be busy on the eye.
  • The color palette is very important in a smaller home. Bold, bright colors will make spaces feel smaller because they seem closer than they really are. You want your walls and your furniture to come together pleasingly-not pop from each other.
  • Use the same type of flooring throughout your home. Keeping a flow creates a larger feel in smaller spaces.

So if  you are downsizing and purchasing a smaller, more suitable  home consider the benefits of a foreclosure and embrace all of the benefits that these simple décor tips can offer.

For a list of all available foreclosures in South Florida, please visit www.adacheREO.com. For commercial real estate opportunities, and real estate bulk sales in Florida, visit us at www.AdacheREO.com/bulk.


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A GOOD END TO AN AWFUL YEAR

February 2nd, 2010


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Government numbers released last week revealed the US’s gross domestic product (GDP), the stat that measures economy growth, rose 5.7% during the last quarter of 2009. This is above the 4.7% expected by leading economists. It was the second consecutive quarter in black ink. This figure is 12.1% higher than the -6.4% reported during the first quarter. Not since the third quarter of 2003 have we seen a fourth quarter growth like this. A good end to an awful year.

Despite the growth in the last two quarters, the economy still shrunk by 2.4% in 2009. That was the biggest drop in 63 years and first annual decline since 1991. The two consecutive quarters with growth do not officially end the recession. That determination will be made by the National Bureau of Economic Research and it may take several months before they made such announcement should, it come to that.

Economists credit several sources for the change. Turnaround of inventories that needed replenishment, increase in exports and increase in the car manufacturing industry led the way, yet consumers did not spend at the same rate. Consumer spending is about two thirds of the US economic output.

“In late 2008 into 2009 everyone freaked out to prepare for Armageddon,” said Lakshman Achuthan, managing director of Economic Cycle Research Institute to CNN. “They fired everybody and stopped buying inventories. That overreaction is what’s being undone. Yes, you have to have jobs growth, but we’ll get that next, probably in January or February.”

We may have started to rebound after hitting the bottom of this recession, or we may be very close to it. What is clear is that sooner than later the economy will start consistently growing again and with the housing market being one of the key measurements of such recovery, the time to take advantage the underpriced properties is now. If you keep waiting for the residential market’s bottom in order to save an extra 2 or 3% you may miss the boat. As seasoned investors like to repeat: “It is not about timing the market, it is about time in the market”.

For a list of all available foreclosures in South Florida, please visit www.adacheREO.com. For commercial real estate opportunities, and real estate bulk sales in Florida, visit us at www.AdacheREO.com/bulk.


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THE UNITED STATES REMAINS THE MOST DESIREABLE INVESTMENT

January 29th, 2010


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Foreign investors remain committed to the United States as their preferred real estate investment opportunity, according to a recent article in the Florida Real Estate Journal.

A survey conducted in the last quarter of 2009 among the participants of the 18th Annual Association of Foreign Investors in Real Estate (AFIRE), revealed the continued loyalty to the US.  Fifty-one percent of survey respondents identified the US as providing the best opportunity for capital appreciation. This compares to 37 percent in 2008 and 26 in 2007. The U.K. emerged as the second best country for capital appreciation with 30 percent of the votes.

Foreign investors expressed their ability to resume investing, although their plans were postponed in 2009 due to the declining marketplace and limited inventory. New bank inventory and the perceived stabilization of home prices are now bringing international buyers back into the marketplace. According to the survey results, two-thirds of respondents plan to increase their investment in the U.S. in 2010 compared to 2009.

Although each country has different underlying investment motives from political and economic instabilities to currency valuation differences, the US in general but South Florida in particular, have historically been a haven for international buyers due to the warm climate, geographic location, multitudes of international flights and historic long term stability despite periodic economic setbacks and market corrections.

During the hot market of the past years, both international and domestic investors lost money by getting caught up in “flipping”, and the return of quick money. Now that the dust has settled, the international market seems to be getting back on the map in South Florida. Currently home prices appear to be reaching bottom and the market appears to be nearing a recovery point. Overall, the optimism remains strong as the foreign investors “Pledge Allegiance” to our country.

For a list of all available foreclosures in South Florida, please visit www.adacheREO.com. For commercial real estate opportunities, and real estate bulk sales in Florida, visit us at www.AdacheREO.com/bulk.


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