Clearwater Homes Market Still Outpaces Many Other Areas

The next couple of months will be important in determining the strength and stability in the Clearwater homes and Pinellas County real estate market.

We’ve seen strong sales the last 3 months but I’m starting to see a slight slowdown and it’s not clear yet if it is just the typical change that occurs when we start to enter summer..  It is not unusual to see some slowdown this time of year – Mar through May are usually the strongest buying months.

I wasn’t sure if May was going to be as strong as March and April were this year, being the 2 highest months of sales going all the way back to January 2007, but even though there was a noticeable drop from the range in March and April it was still higher than last May (and every May back through 2007) and ended up being the 3rd highest month of residential property sales in Pinellas County in over 4 years.  This is significant because this year there was no tax credit to boost sale and the 3 Spring months this year still were above the same months last year when the tax credit boost to the market was at its peak.

Look for yourself (orange is 2011 and you can click on the graph to see it full-size):

(Based on information from:  1) PRO/Suncoast MLS for the period of Jan 2007 to May 2011 and from 2) MFRMLS for the period mid-May 2011 thru the end of May 2011)

I know I’ve said this for the last few months and been wrong, but we might possibly see a slowing this next month.  I’ve noticed some slowing in the market recently but can’t tell yet whether this is the typical change as we head into summer or an overall slowing.  I saw something similar in early February and one or two of the other months this year and it turned out that the overall sales for the month were still up.  So we’ll have to wait until June is over to see what happens.

Now that I’ve given you this month’s market update I want to cover some information for anyone who is planning to buy and will be getting financing for your purchase.  This is important information because with all the market changes the process of getting fnancing has gotten tougher and you will need to be prepared for what can come up to be successful in buying the house, condo or townhouse you utlimately decide upon.

At the end of this newsletter I’m going to put a link to an article that was reprinted from the Washington Post which went over 5 points of preparation if you plan to finance your purchase.  The last point is not something you can do much about if it is a problem but the first 4 are definitely under your control.  The 5 points covered in this article are:

” 1.  Start by requesting your free credit report.

2.  Organize all your financial documents.

3.  Keep your finances simple for at least 2 months.

4.  Document your downpayment.

5.  Show a stable work history for the past two years.”

There is more detail on each point in the article and I would say that you should especially pay attention to what it says in points 2 through 4.

On this same subject, I want to cover an aspect of financing that I have found lately to be one of the more frustrating parts which you should be prepared for.  If you are aware of this it won’t necessarily make it any less frustrating but you’ll at least be expecting it.  What I’m referring to is the appraisal.

I have 2 deals that were both scheduled to close this next Friday (both are condos, both are estate sales, both need complete remodeling) and both have run into snags with the appraisal.

The first one had the appraiser come to the condo 2 weeks ago and it took until just a few days ago to find out what the appraised value was.  I won’t go into details but part of the delay was poor communication by the appraiser and appraisal company about an issue that the mortgage broker could have resolved quickly but was allowed to delay things by days.

When we finally got the appraisal it came in $4,000 below the purchase price and when the seller’s agent looked over the appraisal he noticed some discrepancies that would cause the appraisal to come out for less than it should.  Minor things (sarcasm here) like comparing a condo with a wide view of the Intracoastal waterway to a condo with a view of a pond and comparing the interior measurements of one condo to the exterior measurements of another – and not making any adjustments for these differences.  We now have the appraisal company and appraiser reviewing the appraisal in light of these points but because of the fact that it took them so long to get the appraisal report to us (and then get us an appraisal report that was flawed), we have now had to delay the closing a week.

The second situation is one where there were significant problems that came up on the inspection (including one that will be a major expense that the seller knew about and didn’t disclose) and the buyer wants to work with the seller on the price due to this situation.  Since the condo could possibly appraise below the contract price we decided to wait for the appraisal to see how that came in as that could affect how we dealt with the price issue.  The appraisal was due on Tuesday but didn’t come in.  On Wednesday the loan officer called the appraisal company and they said they would have it that day – but it still didn’t come in.  On Thursday the loan officer called the appraisal company and they contacted the appraiser and we were told it would be in that day – but still no appraisal on Thursday.  On Friday we were told once again that the appraisal would be in but still no appraisal.

So now we are a few days from the deadline having to do with inspections issues and have to address that but without the appraisal it will be more difficult to know how to address properly.  And this purchase was also supposed to close this coming Friday and we are going to have to get a week extension.

This problem is a result of a law that our Congress passed 2 years ago as one of the many solutions to the housing crash where independent appraisal companies had to be formed to act as a middleman between lenders and appraisers.  Unfortunately there is little to no oversight or regulation of these companies and they get paid whether they take 3 days or 2 weeks to get the appraisal report to the lender and whether or not someone like a Realtor or buyer has to check their work to make sure it is right and get them to correct sometimes blatantly obvious mistakes.

I don’t see any immediate solution to this situation and don’t assume that this type of problem happens 100% of the time, but you should be aware that this can happen and be prepared for this possibly happening to you so that you won’t get caught off guard if it does.

The other thing you should know is that this problem is not something you should feel hopeless about, if you have a good Realtor representing you and a good loan officer or mortgage broker working with you these problems will get handled in most cases and you will ultimately have a successful closing.  I’ll let you know next month how these 2 deals ultimately turn out.

Well, that’s enough for now.  I hope that this information will be useful to you and that it can help you in any purchase you make in the near future.  And keep this in mind when choosing your Realtor and the person who will help you with your financing because you really do need the best on your side at this time.

Hope to see you soon.

Ron

Article:  In tougher new mortgage reality, preparation is key