Beachfront Foreclosure "Steals" Just Aren’t Happening in South Beach

March 30, 2008 by Lucas Lechuga

Bentley Hilton

I receive a number of phone calls each week from nonlocals looking to “steal” a condo in South Beach directly on the beach. I tell them every time that it’s just not happening. Beachfront property is still in very high demand.

Case in point is a foreclosure condo at Hilton Bentley Miami Beach that became available towards the beginning of February. It’s a 1 bedroom/1 bath with 620 square feet, fully furnished and listed at $379,900. I never posted about this foreclosure because I wanted my best clients to jump on this opportunity before other agents in town knew about it. I took a look at the condo and it was in prestine shape. Great views, plasma TVs in the living room and bedroom, stainless steel appliances and furniture that was in like-new condition. I submitted a few offers but I was told that 8 other offers were submitted and none of mine were the highest. One of my clients has contacted me a few times within the last couple of weeks, out of curiosity, to find out for how much the condo eventually closed. The foreclosure condo at Bentley Beach closed for $459,900 on March 26, 2008. Again, it was listed for $379,900. Someone bid through the asking price by $80,000!

This is not just one instance. I’ve been seeing a number of South Beach foreclosure and short-sale condos being bid through their offers.  As the old adage says, if it looks too good to be true then it usually is.

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176 Comments on "Beachfront Foreclosure "Steals" Just Aren’t Happening in South Beach"


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Anonymous
Miami2008
8 years 2 months ago

What about units in Ten Museum?

Anonymous
Juan L.
8 years 2 months ago

Lucas is this just an isolated incident that happened to sell over asking?? Or just another case of FRAUD.are you going to publish statistic’s of ALL Oceanfront condo’s SOLD last month?That will tell the tale.I have been watching and talking to many many people in town and everybody has the same view …that price’s on the Ocean or inland are not going UP but rather Down.I would like to get a true picture of what is really happening with Oceanfront Condo’s. Thank’s Lucas

Anonymous
8 years 2 months ago

What about them? People always ask me about foreclosures in new buildings. They aren’t going to happen for a while. Why would someone who felt that they would have financial difficulties in the near future close on a condo? They would be better off just walking away and not having a foreclosure on their credit. They would also save themselves a good amount of money in closing costs.

Anonymous
AJ
8 years 2 months ago

Not impressed with this story at all. Please refer to my comment posted in news and rumours about how impossible it is becoming to get a mortgage for a Miami highrise condo. So if only people with hard cash can bid for these units, their numbers are not enough to save all the tidal wave of foreclosures that are yet to hit the market in the next one year. Then we will see if this story holds up then.

Anonymous
Moneyman
8 years 2 months ago

I disagree–The STEAL’S haven’t even hit the market yet.They are coming in the next WAVE of listings.It’s too soon to tell.Obviously there are owner’s that are still hanging on,paying through the nose with the hopes of a market turnaround.It isn’t going to happen….at least not for another 5-7 year’s.

Anonymous
AJ
8 years 2 months ago
Lucas they are still closing because: 1. They are not as smart as they think they are. If not they would not be speculating so recklessly in the first place. I am not a realtor. I do not have a degree in economics from Harvard or an MBA from Wharton. But I knew back in 2004 when the condo I bought in that summer was increasing by $10,000 a month, that something is just not right and disaster is waiting to happen soon. Anyone who bought in end of 05 or beginning 06 definitely did not use their brains. 2.… Read more »
Anonymous
Moneyman
8 years 2 months ago

AJ I think your 100% right on. Just because one condo sell’s for over asking…it is not a stat. that is typical of the current market condition.I wish it was.

Anonymous
jcrimes
8 years 2 months ago
lucas i don’t agree with you often, but when you’re right, you’re right. at least in SOBE, on the beach side, i don’t think you’ll really see any so called steals, no matter how long it takes the market to correct. limited amount of buildings, with, after the finishing of continuum II, no more supply coming online any time soon. not to mention, the investor who bought in the il villaggios of the world, if that even happened on any large scale, i have to imagine, is a completely different financial beast compared to the morons who were plopping down… Read more »
Anonymous
Miami2008
8 years 2 months ago

I asked about Ten inparticluar because it started closing around June of last year and about 75% of the units closed. I figured we should see some foreclosure activity there soon. I do agree that beach property in general will be more difficult to get at a steal. Wow, just looked a that units maint $1000/month…ouch

Anonymous
8 years 2 months ago

Juan L,

I’m not sure who you’re talking to but oceanfront condos are still selling at premium prices. You are correct, however, that inland condo prices have dropped within recent years. Potential buyers of them condos are more apt to have financing difficulties. The buyers of oceanfront properties are mainly cash buyers. This past week, I closed on two oceanfront condos and neither previous owner took a loss. Prices are still holding strong there.

Anonymous
carbonblackcab
8 years 2 months ago
The bentlen hilton is in a great location. It is opposite 112 prime and right next to club nikki and other nice restaurants including Devitos. I looked up a 640 sq.ft condo at the Bentley on zillow and saw that the price back in mid 2003 was in the High 200K range. Here is the URL to zillow price chart: http://www.zillow.com/Charts.htm?chartDuration=10years&zpid=63615999 The condo that is listed above in the zillow site has an asking price of $825K. It is similar in square footage to the one that Lucas mentions in this blog posting. So it is going for a 50%… Read more »
Anonymous
Raffi
8 years 2 months ago
Lucas, I agree with you again. I’ve always said just as you have that the beachfront will hold its value. Beachfront in Miami is Beachfront in Miami, I dont care what kind of recession we are in. there are still boatloads of people around the world with lots of money that buy these up. and as far as financing go’s, It may be harder but that just means that people are a)buying in cash or b) putting a bigger down payment. i know a few people that have put down 35-40% down and gotten financing without a problem. Inland is… Read more »
Anonymous
8 years 2 months ago
carbonblackcab, As far as Continuum II goes, I was there this past week and I was told that they weren’t expecting anything more than a 10 percent walk-away rate. I took some pictures and will share those with others within the next week. I was pretty impressed by what I saw but then again I was showing condos that were priced over $2M. For that kind of money, I better be impressed. I don’t agree with your assessment on the foreclosure condo at Bentley Hilton. As an owner, you have the right to place the condo in the condo-hotel program.… Read more »
Anonymous
8 years 2 months ago
Last week, I spent a day with a client who had read an article in the Wall Street Journal about prices falling 30% in Miami within recent years. The problem was that he wanted to buy condos in South of Fifth in South Beach. I explained to him that Miami was a completely different market than Miami Beach (especially South Beach). I showed him about 6 condos that were priced from $1.5M to a little over $3M. He ended up making all-cash offers on 3 condos that were about 12-13% below asking price. None of them were accepted. The counteroffers… Read more »
Anonymous
8 years 2 months ago

jcrimes,

I don’t have much to say about Ios on the Bay. I think it’s a great concept but I don’t think it’ll hold much weight for about 3-5 years. It’s a great concept, and I think the architecture is great, but I think the location will hold it back from realizing its full potential. In time, however, it will prove to be a great development.

Anonymous
AJ
8 years 2 months ago
Dear bull shit, I think you should leran to control yourself. If you are such a stand up guy, why are you hiding behind a crappy name? In any case this is a site for expessing honest opinion. Not expletives. I am glad that this site even exists. If you think a story is not right, say it so with out being abusive or even better, get lost. By being a child, you are putting this wonderful site in jeopardy. The fact that the moderator lets in such rants like yours is itself a testament to the integrity of this… Read more »
Anonymous
Renter Tom
8 years 2 months ago

South Beach will probably hold up pretty well….but the days of 15% per year increases aren’t here anymore. I would expect some overall declines in SoBe going forward….but probably few “steals” even from those wannabes that go into foreclosure since there is still a good demand from people with $$$ and limited supply, not quite Central Park but close. But SoBe won’t be immune, it just won’t be.

Anonymous
BFG
8 years 2 months ago
The last sale price on that unit was $900,000 in Nov 2005. That’s a 48% drop in value. I think it is important to note that just because prices have been slow to come down in the beachfront markets, doesn’t mean that they aren’t due for a large correction. I’m sure the buyer of this unit thought he was getting a good deal because he bought it for half what the last owner did. I’m also sure there are enough of these people out there that we will continue to see things like this. But there won’t be enough of… Read more »
Anonymous
carbonblackcab
8 years 2 months ago
rentertom….the condo being discussed in this blog entry sold for 48% below what is sold for previously (number from BFG). So prices are not holding up well at all. If we are seeing a 48% drop now, what will we see a year or two from now. The credit crunch is about to hit the credit-card and auto loan market. That credit crunch is going to be felt by normal everyday people (not just bankers or investment banks). Also, the myth that all buyer south of 5th are wealthy south americans, that myth is false. I know a lot of… Read more »
Anonymous
Cyrus
8 years 2 months ago
ok guys, it IS a bit ridiculous to think that EVERY seller is in financial distress and that every buyer in the mkt is a moron. if someone lives in london or another major foreign city (lets not forget the ridiculous money in moscow, middle east etc..), $450k for a beachfront getaway is nothing! so don’t jump on every single sale that happens. i can understand some (including me) that think things are slowing and getting worse, etc…but for many buyers, esp foreign, these prices are cheap! southern france and spain doesn’t offer beaches as nice as miami (though those… Read more »
Anonymous
Marcela
8 years 2 months ago

South Beach is a different market. I am not saying that foreclosures can’t happen there, but south of fifth condos are very desirable and unique. This week I was showing a property for a foreign buyer at continuum II and my client loved it. The unit is over $2M and he believes the price for those views are a steal.

I did find out about a unit that was appraised at $2.6M and the owner is asking around $2M, so there are different options.

Anonymous
perez
8 years 2 months ago

Maybe the deals are a little further north on the Beach. I think the cheapest pre-construction Canyon Ranch unit was $800,000, now I see there are a few under those ’05 prices, and unit 309S is going for $545,000.

Anonymous
Wild Bill
8 years 2 months ago
Buying foreclosure’s does not always equate with being a good deal. Only way for the Realtor to get paid is to have a winning bid. That means bending the truth to scare their client offer more. A condo/hotel is just that. You might also be forced to renovate your unit every couple of years to meet hotel standards. This is a bad financial decision. It’s too small to rent to a porn production company. This will cut into your profit potential. South of Fifth is a second tier area. The city will be working on it’s second capital improvement project… Read more »
Anonymous
Sam
8 years 2 months ago
Hey, I live in Texas, I just returned from South Beach. I looked at 13 Condos in three days and made 3 offers, One short sale, already approved by seller and at the bank, then two others. All offers where 20% or so less than asking. I am told that I should be ready to close on one or maybe two units. Average price $400 foot, all within one block from water and views. I planned to go and stay 3 or 4 months annually. I think that it is a great deal. ven with a 1.8% real estate Tax.… Read more »
Anonymous
andiron
8 years 2 months ago

Lechuga does a very good job here ..but his prognosis of south beach real estate future (or even coral gables/aventura etc) is patently optimistic.
No doubt, these strongholds will keel over the last, but when they do it would surely be impressive.
Rich folks would be staring down asset deflation that is coming in the next 2-3 yrs…in fact i would think that the lower 2 quintiles will stabilize first. The uppermost quintile will stabilize last.
Welcome to The Grand Deflation. Worldwide Reset on the Asset Prices.

Anonymous
Former Banker
8 years 2 months ago
Wait until fannie mae and fredie mac are nationalized later this year. Beach front is beach front, HOWEVER even this is not moving in this market. By the way, to be fair why don’t you address the insurance crisis and rates on the beach. One strong hurricane can wipe out the market. Spain is in a real estate crisis now, and so is England. When the rest of the Europeans stop buying who is going to pickup the market? This is a consumer driven market, that produces very little now, with rising energy prices and devalued dollar. you would have… Read more »
Anonymous
Former Banker
8 years 2 months ago
Sam, see if you can get out of your contract. I believe you have 3 business days to recend a contract in Florida. 400 dollars a foot is too much by not being on the ocean. Also you have to be careful with short sales. There are short sales on mortgage fraud units, that will be short sales foreever, because they are way over priced. 20 percent is not off much in this market. I wonder who your agent is? Becareful agents here in Florida are very scummy, even worse in bad times. Remember they are on commission only, worse… Read more »
Anonymous
Joe
8 years 2 months ago

If the U.S. economy is hurting, the rest of the world is going to be hurting. I don’t care what people say that foreigners will come to the U.S. and buy property. It will not happen. The U.S. has a very strong holding in the world economy, VERY STRONG. The citizens of the U.S. are forced to work 40 hours a week and on top of that, we are taxed. We have very strong industrialized economy with the typical, “American Dream” to further make us work to achieve that goal.

Anonymous
umer ahmad
8 years 2 months ago

The steals in south beach will be coming (perhaps not right on the beach) but i saw a flamingo 2/2 for $360,000 and you get $180,000 in equity; from the bank-Im not sure how you would rate that?

Anonymous
jcrimes
8 years 2 months ago

several of you are missing the point lucas is trying to make here…south beach, directly on the beach, there won’t be any “steals.” you might get a price that knocks off the appreciation gains of ’04/’05 (as is the case here with the nov ’05 sale price being patently absurd), but frankly, those were false gains in the first place. sobe in the interior, and to a lesser extent, on the bay, that’s a different story.

and for the guy who mentioned freddie and fannie being nationalized…come on, that’s not even remotely a possibility.

Anonymous
Julian
8 years 1 month ago
Thankyou BFG/Carbonblack Lucas – you should work for Tony Blair. The spin is extraordinary. The real message, if the information above is correct, is 1. That this unit is selling for nearly 50% less than its peak price at the end of November 2005. 2. Listing prices at Bentley Beach still hover in the $1000-$1500 a range. I.e. the mind set is still November 2005. 3. The new price has been set at $725 a sq ft. There’s clearly demand at this price point, rightly or wrongly, and there clearly isn’t at the list prices for the rest in the… Read more »
Anonymous
8 years 1 month ago
Jcrimes is right on the money with what I meant with this post. Most bargain hunters don’t care if prices have come down 30 percent in recent years. Investors are looking for 10-30 percent discounts from TODAY’S prices. You might be able to find that in a condo in South Beach located inland or on the bay but “stealing” a condo directly on the beach for those types of discounts just isn’t happening. There are very, very few condo foreclosures in South Beach that are located directly on the beach. Most nonlocal investors don’t truly know the market in South… Read more »
Anonymous
wade
8 years 1 month ago
Lucas , I have been reading your blog for a while, a great place to see the trends , to a point,, but i t appears that at times, the blind is leading the blind. A case in point: Umer Ahmed said: “The steals in south beach will be coming (perhaps not right on the beach) but i saw a flamingo 2/2 for $360,000 and you get $180,000 in equity; from the bank”- Wake up, you do not get 180k equity from the bank. (dumbest thing I have heard today) there is zero equity . 360k is the value not… Read more »
Anonymous
brian
8 years 1 month ago

A 48% drop is significant.

There is a big trend of setting foreclosures at super low prices just to start a bidding war (although still a huge drop from previous prices).

Prices are coming down in south beach.

Look at Icon. 1 bedrooms in the $400k’s. 2 bedrooms in the $800,000’s. Those are big drops from 2 years ago.

Beachfront is always stronger, but there are maybe only 4-5 buildings worth considering.

Anonymous
Richard
8 years 1 month ago

The first big drop on the beach will be the converted apts. like The Collins and the buildings on West. How long will an investor kick in $2,000 mo. to make up what the rent doesn’t cover.

Anonymous
8 years 1 month ago
Guys – maybe this is a post in itself, but I’m curious as to why people buying would buy downtown instead of on the beach if they were planning on living in their purchase? Reasons like “I want to be in a new highrise and the beach is too much $$,” “I want to be close to my office in Brickell,” “The only thing I can afford on the beach is a shoebox in a building from 1929,” “I really, REALLY like the burgers at 5 guys.” I’m just curious. I don’t see a reason to live in the Miami… Read more »
Anonymous
Raffi
8 years 1 month ago
Kevin, ” I don’t see a reason to live in Miami area unless you live in Miami Beach” are you serious?? is that even a question? First of all maintenance alone is more expensive, insurance on the condo, taxes are higher on the beach, even gas for the car costs more on the beach. another reason could be that alot of people are not single…wow what a concept. the beach isn’t really family friendly. I would no way in hell raise my kid in Miami Beach, i would like them to have morals and values and not see crackheads and… Read more »
Anonymous
carbonblackcab
8 years 1 month ago
Kevin. While SOBE area is great, it is not the only good area to live in Miami. There are some really good places to live in including parts of coconut grove, parts of Coral Gables, parts of Ft. Lauderdale, etc. About traffic, it is not too bad when you compare it to other metro areas. I moved to Miami from Santa Monica, CA (‘burb of LA) and traffic there was far worse than miami. I actually lived in south beach for a few months back in 2006 at a friends condo (he was in china for 6 months). I was… Read more »
Anonymous
8 years 1 month ago
Raffi – I definitely would have agreed with you a few years ago. I’ve lived on the beach for 5 years now. I had the same take on Miami Beach – not family friendly, dirty, and the whole concept of don’t sleep where you shit. We can go on and on. We all know that people come to Miami Beach to abuse it and leave. The problem with your reasons for disliking Miami Beach are that they’re really reasons for disliking Southeast Florida. Everything is more expensive here. Gas may be a few pennies more on the beach, insurance a… Read more »
Anonymous
8 years 1 month ago

Check out this MIAMI BEACH REAL ESTATE NEWS CLIP. It explains how the current weak U.S Dollar might save the local Real Estate Market. The most important fact to note here is how they make the distinction between the Miami and Miami Beach Real Estate Markets, a detail that many media fail to capture.

http://flamingoexpert.wordpress.com/2008/03/24/miami-beach-condos-foreign-buyer-report/

Anonymous
Julian
8 years 1 month ago

Sorry Mr Flamingo. Years and years of inventory of Miami Beach. Big big yawn – people should given up the spin that Miami and Miami Beach are different. The numbers don’t support that assertion to any relevant degree.

Anonymous
Moneyman
8 years 1 month ago

SAM I hope you have an oil well in your backyard.ARE you thinking about what your doing??? Or do you just have so much money …you don’t know what to do with.Take the advice you were given and CANCEL you have 3 day’s.Don’t be another fool buying NOW.RENT or WAIT a bit.I promise you’ll thank me later. GOOD LUCK

Anonymous
8 years 1 month ago
“Also on another note. Today I was in Sheraton in Manhattan for the Real Estate Auction for NY and NJ properties(similar to the one that’s going to be in Miami in April 13). Investors are still there or I should say the desire to buy Real Estate is there” How would one reconcile that with the disaster Sotheby’s (non) auction that took place for Hi-End South Florida Real Estate on March 28. Does it pretty much signify the obvious? Wage earners in the NE can set a floor for high end primary residential RE, while the South FL high end… Read more »
Anonymous
Wild Bill
8 years 1 month ago

Best place to live in Miami is Midtown. You can sell your car to pay your mortgage and walk to Target and Marshalls. More money saved to pay your mortgage.
Second best place is Miami Beach during Memorial Day weekend. Party on!

Anonymous
Joe
8 years 1 month ago

I just saw a fellow co-worker loose his job today. There goes his mortage, too. We will see who will win this ridiculous house market price.

Anonymous
Moneyman
8 years 1 month ago

I think the ONLY one’s to win are the realestate salespeople.It dosen’t matter if it sell’s for 300K 400k 650K or a Million+++ they still make their cut no matter what.It dosen’t make a difference if the vendor is making or losing……the salesperson is still making and MAKING BIG TIME.No offence to the many realestate friend’s we all have……but think about it ?????

Anonymous
Renter Tom
8 years 1 month ago

If you think the weak dollar is the savior, then you are wrong. You’d be better off to simply convert your currency now and wait for the real estate bottom instead of actually buying now. Non-locals are the easiest fools I suppose.

Anonymous
Moneyman
8 years 1 month ago

Hello Renter Tom…I’ve been missing your comments on this blog lately.Glad to hear that your all settled in your new RENTAL.Smart man.Next year you can have your pick of about 100,000 properties for sale.You will be able to name your price….that’s if you even want to buy.

Anonymous
HONG KONG INVESTOR
8 years 1 month ago

The 3 most important thing’s in realestate today.RENT RENT RENT

Anonymous
Antonio
8 years 1 month ago

With all this talk about the Beach being better than Downtown (I disagree), anyone want to rank where the best and worst locations will be for real estate in Miami? I have no doubt that some areas will be better than others. Any thoughts?

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