Here are some common mistakes when selling your Miami Beach or South Beach condo:

1. Making small price reductions. I’ve said it before, so I don’t have to say it again.
2. Hiring the wrong agent. Having a competent, professional agent is more important than ever.
3. Waiting “out” the market. There are many, many, many people thinking that exact same thing.
4. Showing a cluttered home. The competition is stiff, folks. Clean, paint and unclutter.
5. Not taking the first offer. Two out of three times, the first offer is YOUR best offer!

It is my feeling that foreclosures in general ARE NOT the best buys for one reason:  the majority of the foreclosures that are available were originally purchased at or near the “peak” of the market—and the banks have lent too much money on these properties.  Since the banks are owed so much money on a typical foreclosed property, they don’t have the ability to sell it at today’s market price.  From WSVN’s Foreclosure Forced Out

Auctioneer: “Welcome to the mortgage foreclosure sale.”

Each week, hundreds of properties in foreclosure are auctioned off.

Auctioneer: ”Home Equity Mortgage Corp. vs. Butler.”

On this day, for the first time in 21 years, not a single property sold, the banks had to keep them all.

Luis Valdeon: “The banks lent too much money. They did first mortgage and second mortgages, and they’re completely off of what the price really are, and that’s why everything is so high; you can’t sell them.”

And the foreclosed properties are piling up.

Click Above to Play Video

Why The Miami Beach Real Estate Market Isn’t That Bad

This is a five year history for the South Beach condo market for area code 33139.  The dark green bar represents condo sales and the light green bar represents condo units on the market.

I know that some of the numbers are a bit hard to read but they really don’t matter anyway.  What matters is the incredible amout of inventory (light green bar) that started to accumulate in May 2005.  The number of sales are off from the peak, but nothing alarming.  The real story here is the amount of inventory on the market.  People have not stopped buying here and Miami Beach real estate continues to sell if it is priced right.  If you need to sell your Miami Beach condo, PRICE IT RIGHT.  If you don’t need to sell your condo, now is NOT the time to sell and you should take it off the market until some of the inventory gets absorbed.  More from Foreclosure Forced Out

Barry Habib: “There’s no simple solution.”

Barry Habib is a nationally known mortgage expert. His advice? Get out before you get in trouble.

Barry Habib: “If they have equity in it, they’ve got to find a way to protect that equity. Put the house up for sale. Don’t be greedy. Don’t try and put it up at an unrealistic number. Homes sell, and they sell very quickly if they’re priced right in every market.”

This month I have started to feel that Miami Beach condo sellers are coming to terms with the reality of the “new” market. The impending wave of new condos “across the bridge” will no doubt bring down the market as a whole. Don’t worry, the best properties in the best locations are the LAST to go down and the FIRST to come up!

Three new luxury buildings will be added to the Miami Beach real estate mix: Continuum II, Apogee South Beach and Canyon Ranch Living Miami Beach. It will be interesting to see how many speculators place their units on the market at Continuum II.  Since Apogee South Beach has so few units (67), I think that any inventory that comes to market will be quickly absorbed.

So….You Want to Buy a Condo in South Beach?—What to Do

Always be guided by your gut instinct. Never let anyone talk you into something that you don’t feel is quite right. Even in this wobbly market, I would have NO problem buying a unit a Continuum, NONE! Here’s why: Location and supply and demand.

Kevin’s Recommendations

Continuum I. I believe it is actually a steal. Yup, UNDER-PRICED!

Apogee South Beach. This building is very pricey but will no doubt become the most prestigious condominium in ALL of South Florida. To be delivered later this year.

Canyon Ranch Living Miami Beach. One of the only projects along with Setai South Beach that is actually a destination.

One Bal Harbour. Arguably one of the two best locations in all of South Florida.

ICON South Beach. This one is all about timing. There is a lot of inventory on the market and not many condo sales. The owners that need to sell will be in reality VERY SOON.

Miami Beach Real Estate Condo Buying Tips:

• East and Southeast exposures are the most desired. If the condominium is on the bay, then the Southwest exposure would be the preferred exposure.
• Two bedroom units are better than three bedroom units (larger pool of buyers)
• If you can find a luxury condo on the ocean with one bedroom units with eastern exposure, those are rare. Continuum II has some and so does Canyon Ranch Living. They are gold. Developers typically give the larger units the preferred east exposure.
• Never buy a “flow-through” unit without seeing it or taking a tour of others. Some people like them—some people don’t.
• Corner “flow-through” units (three exposures) are rare. Apogee has them and so does Canyon Ranch Living. Great on paper, GREATER in reality.

Miami Beach Condos, Miami Beach real estate, One Bal Harbour, South Beach real estate, South Beach condos, Continuum II South Beach, Canyon Ranch Living Miami Beach

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South Beach Real Estate Blog: Your Miami Beach Real Estate On-line Newsroom

Ok, so historically, August and September are the slowest months of the year with regard to Miami Beach real estate sales activity. The numbers from last month’s post don’t really reflect anything earth-shattering.

This data is based on information from the Southeast Florida Regional (SEFR) MLS or from the associations participating in the SEFR for the period 1/1/07 through 10/3/2007.

This South Beach condo analysis covers the South Beach condos: Continuum South Beach, Murano at Portofino, Murano Grande, ICON South Beach, Portofino Tower, Yacht Club at Portofino, and South Pointe Tower

Here are some of the highlights:

Continuum had five closings from 9/4/2007–10/3/2007. That is impressive given the time of the year.

Miami Beach Condo Sellers: Time Is NOT Your Friend

Here, surprisingly, the average days on market has actually fallen in every condominium except Murano Grande from the previous months stats. ICON South Beach and Portofino Tower are continuing to choke on their own inventory. Every building except for Murano at Portofino and Continuum has problems with their amount of inventory and time on the market.

I sense that many owners are waiting for “season” before adjusting their prices where they need to be. Being “on the ground,” I know that there are buyers out there, it is just that so many sellers are not being realistic or hearing what the market is telling them.

Kevin’s advice: If you are a serious Miami Beach condo seller, don’t wait until after the “season” (“season” typically is December-June) to re-evaluate your pricing, DO IT NOW! If you plan on re-evaluating your list price, here is a guide to help you do it, the right way.

A normal real estate market dictates that about 10% of the condominium’s units could be available for sale at any given time. Murano Grande, ICON South Beach, and Portofino Tower have way too much inventory. Real estate market fundamentals, like location and supply and demand, are more important than ever.

Here is a quick run-down of the Miami Beach real estate activity in the SoFi neighborhood of South Beach from 9/4/07 thru 10/3/07:

Nine units closed, four of which were in Continuum South Beach

Two units pended (awaiting closing, under contract); both of which were in ICON South Beach

40 units came on the market

• Continuum: 7
• Murano at Portofino: 6
• Murano Grande: 7
• ICON South Beach: 5
• Portofino Tower: 2
• Yacht Club at Portofino: 9
• South Pointe Tower: 4

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To calculate monthly absorption rate, I have taken all the condos that are currently on the market in each building in the South of Fifth Street (SoFi) neighborhood of South Beach, and divided them by the number of listings that have sold in their respective condo in the past six months and divided that number by six. Many people compute absorption rates by using the number of sales in a one month period, but I use a six month sales average so it “smoothes” the seasonal “peaks and valleys” to gauge the true overall activity.

The data was based on information from the Southeast Florida Regional (SEFR) MLS or from the associations participating in the SEFR for the period 1/1/07 through 9/3/2007.

Here’s the math:

Number of listings: 40

Number of sales in the last six months: 8

8 divided by 6= 1.33 sales per month

Number of listings: 40 divided by number of sales per month: 1.33= 30 months of supply

Key for South Beach Condos-Absorption Rates

The chart below illustrates the absorption rates for the Continuum, Murano at Portofino, Murano Grande, ICON South Beach, Portofino Tower, Yacht Club at Portofino, and South Pointe Tower, and shows how each building is performing relative to the amount of inventory and the amount of sales.

Red Hot Condo Buyers Market in South Beach

From the graph it is clear the Portofino Tower is a “red hot” buyers market with 34 months of inventory. Also, ICON and Yacht Club at Portofino are good condominiums to focus on as well. A balanced market is generally anywhere between six to nine months of inventory, anything above nine months is considered a buyers market.

What Does This Mean for Miami Beach Condo Sellers?

If you are looking to sell your Miami Beach real estate, make sure your prospective real estate broker keeps you informed about the market conditions in your specific area and building. Knowing the absorption rate for your South Beach condo will help you determine how aggressive you need to be with pricing, staging, and marketing your condo to maximize the likelihood of a prompt sale!

South Beach Luxury Condos in 33139: Continuum, Murano at Portofino, Murano Grande, ICON South Beach, Portofino Tower, Yacht Club at Portofino, South Pointe Tower

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Since Brad eats, breathes and lives real estate web design and blogs, he brings a unique perspective on how consumers can get the most out of real estate blog sites.

Kevin: What can consumers get out of a blog that they can’t find on a standard real estate website?

Brad: I think a big thing is fresh information. Since most standard websites don’t timestamp their articles, it can be hard to determine the age of the article (and more importantly, if it’s still accurate). Blogs on the other hand usually focus on the here and now. In addition, most blogs allow visitors to comment on specific blog post. This gives consumers a chance to connect with the agent.

Kevin: Can you go into a little more detail about “connecting” with the agent?

Brad: I won’t win many real estate agent friends saying this, but a consumer should really use the blog as an opportunity to interact with the agent without having to give up their identity. That’s the beauty of blogs. The consumer can stay in control. If they have a question, they can simply submit a comment on the blog without revealing their contact information. You quickly find out if the real estate agent is going to go the extra mile and be a true information resource. If an agent is willing to answer your question on their blog, then it shows that they truly have the interest of the consumer in mind.

Kevin: That’s a great point. I know website visitors hate it when agents make the visitor give up their identity before giving them any information.

Brad: Yeah, this still amazes me. The internet is a vast information resource. If a website makes me “sign up” and holds the information hostage, I will just go somewhere else. I think I speak for most consumers when I say that I want to be educated before I contact someone. That’s where some real estate agents go wrong. To be honest, I don’t understand why they don’t get this. After all, wouldn’t they rather work with an educated consumer anyway? That’s why I love your website so much. There is an amazing amount of information about Miami Beach Condos! And it’s freely available without any strings attached. I think that is also why blogs have caught on so fast. It’s free and relevant information.

Kevin: Yes free, but not always reliable. How can consumers sort though the true information and the sales gimmicks?

Brad: What? You mean not everything I read on the internet is true? But I am bidding on eBay for this great ocean front property in Kansas! But seriously, there are a few things that help weed out the people who just use their blog as a bait and switch sales tool…

1. See if the real estate agent credits their references. Most legit blogs will often reference other opinions in their blog (in the form of links) additionally; they will credit any quotes or statistics that they used in their blog.
2. Check other sites for relevancy. Is anyone else in the blogosphere (the blog community) discussing this same topic? Is their data in line with other sites?
3. Check the date and frequency. People trying to use their blog as a sales gimmick are typically lazy. They will try to get the most mileage with the smallest amount of work. So check the date of the last post, and check how frequently they add content to the blog.
4. Use your gut. Typically, just looking at the blog from an objective point of view will help determine if you smell a rat!

Kevin: You mentioned other blog sites. Where can consumers find other real estate blogs?

Brad: My two favorite places to search blogs would have to be Technorati and Google Blog Search. You can search by keywords in a post such as your City, or by specific blog sites.

Kevin: Any more advice for consumers using blog sites?

Brad: Just remember that a blog should provide an inside peak at the way the real estate agent thinks and operates. It can reveal their expertise (or lack thereof) about the market, the area, and more. At the end of the day, consumers want an expert in their corner. They like having the opportunity to research agents via their blogs, before diving in and emailing or calling the agent direct, and giving them their contact information. Anonymous posting of comments, gives them that opportunity.

Forget all those news articles trying to explain what it means to you.  Here is a tax-plan calculator, which attempts to give an idea of your possible savings.

Over the last few months, I have been mildly following the tax reform see-saw.  In the very beginning, it was “thought” (or more likely, hoped for) that Florida property taxes were going to be completely eliminated.  Many people jumped on the “no more property tax” bandwagon.  E-mails were sent, initiatives were started.  I, for one, did not get caught up in the ying and yang of it all.  No mass e-mails from me!

You know why?  I have common sense.  Who in their right mind realistically believed that property taxes, being as astronomical as they are, would be COMPLETELY eliminated.

So, here we are with a really complicated and IMPOSSIBLE to figure out tax-reform proposal that in no way resembles the initial hoopla of the “Florida to completely eliminate property taxes” SLOGAN.

Hmmm…feels a lot like the insurance reform we were promised, no?

Recently I had a conversation with a client with regard to a condo-hotel unit that he purchased, pre-construction, at a resort which is nearing completion.

The reason for his call, being an investor, was to basically get my opinion on what he should do with his unit. It was clear that his first thought was to put the unit up for re-sale when it closed. As our conversation progressed, I offered him some other options to consider with regard to his investment.

Some of his options are:

1. Price the unit VERY aggressively and to try to line up a buyer prior to closing. Since what he owns is basically an option to purchase, and he has owned that option for more than two years, the profits would be taxed on a long-term capital gains basis. That would allow my client to sell quickly, for a lower price, and limit his exposure and holding costs.
2. Knowing that he has an extremely desirable unit, close on the unit, wait a specified time period (less than one year) and then sell at a much higher price. Since he now took title to the asset, his profit would be taxed on a short-term capital gain basis.
3. Close on the unit, sign a management contract with the hotel operator and put the unit in the hotel pool and sell at a later date, past the one-year period of owning the asset. His profit would then be taxed on a long-term capital gain basis. There are some draw-backs to this option:

a. When he sells the unit, the management contract stays in effect with the unit, so if the new buyer is NOT an investor and doesn’t want the unit in the hotel pool, that unit would not be an option for the new buyer.

b. The hotel operator has the right of first refusal on the unit when the owner decides to sell.

After we went through all of the above, and he was processing the information, he paused and said ‘you know, Kevin you are really acting more as an advisor, and not like a typical salesman, and I’m really impressed’. I responded by saying that I don’t think or operate like a salesman, and it wouldn’t be my objective to ‘set you up’ for a quick commission. My goal is always to serve the client, and being compensated, now or much later when the time is BEST for the client, is the reward for a job well done.

I appreciated his remarks very much. It’s just how I am. But it’s nice when someone notices.

Beth: Kevin, how would you describe an as-is sale from the standpoint of the seller?

Kevin: Well Beth, very simply put, in an as-is sale, the seller is not contractually obligated to repair any items.

Beth: From the buyer’s standpoint, what happens if the buyer finds something, as a result of the inspection that they can’t live with? Must they proceed with the sale on an as-is basis?

Kevin: No, the buyer has a few choices, including:

1. Accept the property in it’s as-is condition

2. Negotiate the finding with the seller

3. Cancel the contract.

Beth: Ok, so in short, the buyer does not lose the opportunity to discuss any negative findings, even though the contract says he is buying the property as-is?

Kevin: Correct.

Beth: On a warranted sale, is the seller agreeing to fix everything regardless of cost?

Kevin: Not necessarily. The contract will provide a dollar amount within which the seller agrees to repair all items which are considered warranted items. This way the seller understands the limit of his financial commitment to repairs at the time the contract is signed. The buyer also benefits because he has some assurances that the seller will address concerns within a reasonable cost limit. By having a pre-arranged agreement for repairs, both parties have a reasonable expectation that concerns will be addressed, and the property will close without further need for negotiations after the inspection phase.

Beth: How do you usually sell your listings? As-is or warranted?

Kevin: As-is. It has been the standard for about the last 10 years here in Miami Beach. At this point in time I don’t see the new contract impacting the practice in the near term.

Beth: Even in condos?

Kevin: Especially in condos. The condos that I deal with tend to be newer and have fewer repair issues. So I really don’t see the new contract changes affecting my clients dramatically, except that we will discuss the pros and cons of as-is vs. warranted contracts.

Beth: And what about open building permits? Do your sales include the closing of permits?

Kevin: Yes, for the last few years we have been manually adding the open permit language to the contract in the addenda, which basically obligates the seller to close any open building permits that are attached to the property before closing.

Beth: Well, the new contract might change the way you do things.

Kevin: That is what I hear, and I do think it expands the options of the parties. But as I stated before, I don’t see any dramatic impact on common practice in the near term.

Beth: The new contract has some major changes; one of the changes addresses the treatment of open building permits.

Kevin: Open permits have been an issue here in Miami ever since Hurricane Andrew. The new contract also includes a provision for structures that have never had a permit, which could be a bigger problem than just an open permit.

Beth: Can you explain that provision?

Kevin: Sure. Permits and non-permitted items are now considered to be a repair item, just like the roof and termite. In fact, the standard contract now even includes a liability cap for permits.

Beth: So, what you are saying is that now, when a property is sold as-is the warranty and liability obligation for the seller does not exist?

Kevin: Only if the buyer chooses to accept the property on that basis. The parties still retain the right to negotiate based on the specifics of each sale.

Beth: I’m seeing a slight trending back to a warranted sale because sellers do not want their property off the market while buyers continue to shop for homes during the inspection period. An as-is contract essentially gives a buyer a free “look-see” during the inspection period while having the option to easily cancel the contract if they find another property.

Kevin: Yes, since the market has changed to a buyer’s market, it benefits sellers when they are willing to make more of a commitment to the property repairs; fewer surprises and a stronger commitment from both parties from the beginning.

Beth: So, the new contract really encourages as-is only because of the open permit situation?

Kevin: It would seem so. It makes it easier to purchase as-is, but again, that contract really benefits the buyer. The warranted sale commits both parties a bit more. If a seller knows his/her property is in good condition, it would benefit the seller to have a warranted sale contract.

Beth: Let’s give an example her to clarify the difference with regard to permits in the new contract (FAR 9).

Kevin: Ok.

Beth: You said that you usually do an as-is contract with an addendum for the seller to close any open permits. You can’t do that anymore.

Kevin: Correct. Open permits/non-permitted items are now considered a repair item and the get treated just like roof and termite defects.

Beth: So what happens if a buyer finds an open permit in an as-is sale?

Kevin: The buyer can cancel the contract ONLY if they are within their inspection period.

Beth: So, if the buyer doesn’t check the permits until two days before closing, which happens all the time, is the buyer out of luck?

Kevin: If the buyer is out of their inspection period, yes. A good agent would immediately inform the buyer to check to see if the property has any permit issues. To be clear, this is the responsibility of the buyer, NOT the agent.

Beth: So the moral of this story is for the buyer to do a permit check during the inspection period?

Kevin: Yes, do if right away. You can check anytime even BEFORE presenting an offer, which I strongly recommend so the buyer can address any issues when writing the offer and not wait until the inspection phase. It is better to address the expectations and responsibilities of both parties up-front. You can check them on-line for the City of Miami Beach here or for Miami-Dade County, here.

Beth: In conclusion, I would add that the City of Miami Beach and Miami-Dade County have GREAT sites for consumers to check for permits. There are Title companies and permit checkers that will do this as well.

I would like to thank Beth for taking the time to review this topic with me. My goal for this post, and many more to come over time, is to provide consumers with the opportunity to be a “fly on the wall” during discussions I have with colleagues, clients and external industry professionals. Thanks for joining us!