I often receive emails and phone calls from people who would like to participate in a real estate auction but have little or no knowledge of how the auction process actually works. Paola Iuspa-Abbott, of the Daily Business Review, published a piece today entitled “Real Estate Auctions Can Help Homebuyers Gain Properties But There Are Pitfalls”. It’s a great read for anybody that wants to learn more about the auction process.
I also want to note that there is absolutely no cost to a potential bidder if they decide to work with a licensed real estate agent. The agent’s commission is paid for by the auction house from the buyer’s premium. The winning bidder must still pay the buyer’s premium regardless of whether or not they decide to use the services of a real estate agent.
Miami Condos in Brickell – Red Hot Foreclosure and Short-Sale Condo Deals!
Before anyone takes me seriously, let me first just say that the headline above was meant to be a joke. Once you see the “hot” short-sale and foreclosure deals in the Brickell condo buildings below, you’ll know what I mean. Goes to show that just because a condo is listed as a short-sale or foreclosure doesn’t mean that it is priced well.
I’m not sure why listings like the ones above even make it into the MLS. It’s a complete waste of time in my eyes.
Will History Repeat Itself in Miami?
Earlier this week, I showed a few condos at Villa Regina to a lady who has owned a unit in the building since 1983. She and her husband purchased their condo in November of that year. She told me that for the first year and a half to two years only 25 condos were owned of the 208 total units. The bust had happened and nobody wanted to buy. The developer, Nicholas Morley, eventually went under and the building was later taken over by the FDIC. Nicholas Morley, was a big-time developer back then who was the equivalent of today’s Jorge Perez or Ugo Columbo.
She said that nobody would touch Villa Regina with a ten-foot pole for the first two years after she purchased because the building was either in receivership, meaning that it was undergoing foreclosure proceedings, or it had already been foreclosed upon. As a result, the common areas were under-maintained. The building didn’t have any security, air conditioning in the hallways, a concierge in the lobby nor valet service.
Before the building went into receivership, she, her husband and the condo owners who represented the other 24 units met each month to resolve the problems. They wanted answers. No, in fact, they wanted action. Each month, the condo board sent requests to the developer stating that they themselves would pay to have the building maintained 100 percent. The developer never answered their pleas.
After Villa Regina was foreclosed upon, there were rumors that Nicholas Morley wished to acquire the building from the FDIC for 10 cents on the dollar. The condo board sent letters to the FDIC to prevent this from happening. Nicholas Morley had made them suffer long enough and they didn’t wish to take any chances.
An investment group stepped up to the plate and purchased the remaining units at Villa Regina from the FDIC, a few years after she and her husband had purchased their condo. She stated that “almost overnight, there was interest in buying condos at Villa Regina”. I asked her for how much the investment group purchased the remaining units. She didn’t know but guessed that it was around 50 cents on the dollar. The level of maintenance that was initially promised had finally been restored. People wanted in because the dark cloud that hung over Villa Regina had been lifted. The investment group was then able to sell the remaining units for a profit.
It was especially interesting to hear, from the above source, that the building fell into the hands of the FDIC. This indicates to me that the bank which loaned the money to the developer also went under as well. I don’t expect buildings in Miami on the horizon, however, to fall into the hands of the FDIC for too long, if at all. The world is too widely connected nowadays. Information exchanges hands at such a rapid pace. Investment groups will act much faster in today’s era than that of the 1980s. If a bank yells, “Help!”, several investment groups will be there to say, “Help has arrived, but how bad do you need it?”.
There’s been talk that the current boom and bust in Miami is worse than had existed in the early 1980s. I’ve advised my readers time and again to watch out for the new digs. If you feel like buying, then look for those buildings that were built prior to 2000. They have much more stability because most units in those buildings are owner-occupied. Investors/speculators flocked to the new buildings and those that were yet to be built. The possibility of the above occurring in a new condo development in Miami is likely within the next couple of years. That’s why I’ve been keeping a close eye on each new development’s ability to close units. If you are interested in buying in a new development then you must be aware of the default rate that is occurring there. Those with a default rate higher than 30 percent, in my opinion, will be ones to stay away from until much of this excess supply is purchased.
The oversupply problem in Miami does indeed currently exist and is worse than that which existed in the early 1980s. However, the level of demand that currently exists far outpaces that of which was evident in that decade. Miami is now on the map. Miami now has world-wide attention. The strength of foreign currencies relative to the U.S. Dollar has made it more alluring for foreigners to buy here. It has also become a mecca for second-home buyers, retirees and those who wish to live in tropical climes throughout the year.
The opening lines of the movie Armageddon says, “It happened before. It will happen again. It’s just a question of when”. It will be interesting to see if history repeats itself in Miami and, if so, then to what extent.
Foreclosure Mess Victimizes Renters as Well
A few months ago, I thought about writing this post but I never got around to it. The Wall Street Journal was sitting at my office this afternoon and an article caught my attention: “Mortgage Turmoil Hits Renters As Buildings Go Into Foreclosure”.
The reason why I thought about writing this post a few months ago is because I met someone who faced the very predicament that the Wall Street Journal article discusses. I met a guy who was looking to buy a condo. At the time, he was renting a condo at The Club at Brickell Bay and his lease was going to end within six months. A few weeks after he contacted me, he was notified that the condo was in the foreclosure process. He wasn’t notified, however, as to how much time he had until he needed to vacate. The thought that “today may be the day” entered his mind each day that he rode up the elevator to his apartment.
In the past, I’ve had some clients who offered to pay 12 month’s worth of rent upfront in order to negotiate a better price. I no longer advise this because of the possibility that the landlord will face financial difficulties and go into foreclosure. Renters are required to produce a credit report and background check when becoming a tenant in a condo building. Nowadays, it doesn’t seem so outlandish to me to ask for a credit check from the landlord. I’m not saying that you’ll actually get one but doesn’t it make sense to at least ask for one?
Bayfront Brickell Condo Foreclosure to Sell Below $200 Per Squar Foot?
I’ve been keeping a close eye on a 4 bedroom/4 bath split-level bank-owned condo at Atlantis on Brickell for quite some time. It has 2,628 square feet of interior living space and is located on the third floor. The price has continually been reduced throughout the months that I’ve kept an eye on it, but it now looks appealing. The list price on this unit is $559,900, or $213 per square foot, at the present time.
Below you will see the price changes since it was listed on May 16, 2007:
05/16/2007 – $799,900
06/13/2007 – $759,900
07/16/2007 – $719,900
08/03/2007 – $679,900
08/28/2007 – $644,900
09/25/2007 – $559,900
Unfortunately, the pictures that accompanied the listing are no longer available. I haven’t personally viewed this property yet, but the pictures that were previously available made it apparent that the unit definitely needed some TLC. A few people in my office did visit the unit about six weeks ago and did confirm that the unit does need much work. On the high end, a $170,820, or $65 per square foot, build-out project should make this unit into an A+ residence. A $500,000, or $190 per square foot, offer should seal the deal on this condo given the continual decrease in price every month. I’m sure that Deutsche Bank is growing tired of keeping this property on their books month after month.
A 3/3 with 2,171 square feet of interior space on the same floor at Atlantis on Brickell, which needs some work of its own, is currently listed on the MLS for $750,000, or $345 per square foot. Invest $65 per square foot to fully renovate the unit, with an overall price per square foot of $255, and you should do well.
The Results of Today’s Auction
Six properties were auctioned this afternoon. Five of them were condos and one was a single family home. A couple of weeks ago I wrote about four of the condos.
The auction was held in the back yard of the single family home that was being auctioned, located at 5900 NW 13 Avenue. The single family home was the first property to be auctioned and sold for $53,500. It was a 2 bedroom/1 bath with 622 square feet of interior space. The house was in pretty bad shape but it resides on a large corner lot with .149 acres.
The auctioneers decided that since the remaining properties to be auctioned were all condos they would make it “buyer’s choice”. This meant that the highest bidder got to choose from the remaining available condos. He or she also had the opportunity to buy multiple condos at the same purchase price.
The highest bid for the first round was $496,000. As expected, the bidder selected the 3 bedroom/2 bath townhouse in South Beach. I think the person paid fair market value for the property. I personally visited the townhouse this past weekend and it is in need of a lot of work to make it into a nice residence.
The second round of bidding ended with a high bid amount of $272,000. The bidder selected the one bedroom condo located at The Club at Brickell Bay. I was surprised that bidding went this high.
The highest bid for the third round was $230,500. The bidder selected the 1 bedroom/1 bath condo at Venetia Condo.
The 2 bedroom/1 bath condo at Blue Lagoon Condominiums was selected fourth with a high bid amount of $195,750.
The final condo to be selected was a 2 bedroom/2 bath at Grandview Palace located in North Bay Village. The high bid amount was $190,500.
Short-Sales – Short of Spectacular
Everyone has heard that short-sale and foreclosure listings have increased dramatically in the past 12 months. I’ve found that, as of late, two to four new short-sale listings will appear in the MLS for each neighborhood in Miami per week.
I’m a huge fan of foreclosures but not such a big fan of short-sales, as of right now. I think in about six months things may change, however. I’ve found that the big banks just aren’t ready to play ball yet. Maybe they are just too optimistic about the state of the real estate market. Within the past two months I presented two offers on short-sale condos that were about 15 percent under the lowest comparable sold sale in the building. Both were rejected and the banks countered with figures that were very close to what they were owed. In both cases, what they were owed was much more than what had recently sold in those two buildings.
Banks need to realize that lending practices were lousy, at best, in recent years, and that what is owed to them is a pipe dream. Prices have already come down 20-30 percent from the height of the market here in Miami and Miami Beach. Many project that prices will come down even more. Yesterday, someone emailed me that “Your first loss is often your best loss”. I feel that more banks need to think along these lines. The banks ready to play ball now will be much better off than those holding out for greener pastures. As the saying goes, “Greedy pigs get slaughtered”.
From my experience, however, it does seem that the smaller banks do understand the state of the market and are more willing to negotiate terms. Perhaps, it is not their understanding but rather their eagerness to stay afloat. I think in the next six months, as pressure is added by stockholders, big banks will be much more favorable in their attitude towards short-sales.
There’s a 2 bedroom/2 bathroom condo foreclosure at Courvoisier Courts in Brickell Key that is listed for $449,900. The condo has 1,288 square feet of living space. It also comes with two assigned parking spaces.
I took a look at the unit tonight for an interested client. It is in tip-top condition. The living room has large tiled floors and the bedrooms have brand new carpeting.
The bank’s judgment against the previous owner was for $444,748.00. The condo was foreclosed on June 28, 2007.
The lowest that a 2/2 has sold for at Courvoisier Courts in the past six months is $475,000. That was for an 05 line on the 17th floor. There were also two other 2/2 units that closed within that time frame. Those closed for $540,000 and $555,000. An 06 line unit on the 24th floor sold for $555,000 on June 28, 2007.
The unit doesn’t have a water view though since it is only on the fifth floor. It is an 06 line. The other 06 lines have a partial water view at best though since they face northeast and have obstructed views by other developments. The balcony was pretty large and deeper than most units I’ve seen at Courvoisier Courts.
Brickell Key is one of the most exclusive neighborhoods in Miami. I think getting this condo for $419,000, or $325 per square foot is a solid buy. The July Brickell Key Condo Index revealed that the average price per square foot of condos listed at Courvoisier Courts was $482.45. The average price per square foot of condos sold in the past six months at Courvoisier Courts was $415.01. Most units at Courvoisier Courts come with carpeting throughout, as they were delivered when the building was converted into condos. As mentioned before, this unit has tiled floors in the living room and carpeting in the bedrooms.
Courvoisier Courts was built in 1997. Courvoisier Courts offers fantastic amenities which include: full-service concierge, 24-hour security, fully equipped business center, bi-level fitness center, racquetball/squash courts, bayside swimming pool and sundeck, club room with billiards table, theater room, and valet parking. Courvoisier Courts has a total of 272 condo units in the building.
This is a great opportunity to own a 2 bedroom at Courvoisier Courts for over 20% less than what 2 bedrooms have sold for at Courvoisier Courts in the past six months.
Short-Sale at One Miami – 1 Bedroom/1Bath for $275K !!!
There’s a 1 bedroom/1 bath short-sale at One Miami that was reduced $44,900 today. It is now listed at $275,000 and has 846 square feet of living space. That’s a great deal! The unit is now listed at $325 per square foot. The Brickell condo index for July revealed that the average price per square foot of units sold at One Miami over the last six months is $453.66. There have been 8 one bedroom/one bath units that have closed at One Miami in the past six months. They have sold in the range of $349,000 to $430,000. Like I said, this is a great deal! Prices for one bedroom units at One Miami have come in significantly in recent months but this short-sale unit is the best priced of them all.
The unit comes with one assigned parking space and one complimentary valet space. Amenities at One Miami include: two swimming pools and hot tub, two clubs rooms, two fitness centers, business center, 24-hour security/concierge and valet parking. The maintenance fee is $389 per month. High-speed Internet, basic cable TV, water, sewer and garbage are included in the maintenance fee as well.
Take a look at the MLS listing for more information.
