Today’s question from the email bag come from Michelle – “I am interested in renting a condo, however was a bit put off when the broker explained that the unit was in short sale but the lease would not be affected. It’s a great deal but does not sound too good to be true, I’ve heard horror stories in regards to short sales and don’t want to end being kicked out before the lease is up. Do you think it would be risky to go forward in renting this?”
There are some items which you need to research before making your final decision for renting the condo.
1) What does the actual leasing agreement say in regards to if the condo is sold?
2) Where will your security deposit and if required, your last month’s rent be held? Escrow or trust account? Or with the landlord?
3) What stage of the foreclosure process is the property in? If there a final judgment has been issued by the court – what is the auction date?
4) You should be fully be prepared to live in a fish bowl – you will have to be willing to have the condo shown. If you do not allow to be shown – then it could go into foreclosure.
5) What is the success rate of a property which is a potential short sale of actually being closed or sold? The success rate, expressed as a percentage, does vary from local area to local area.
6) How many short sales has the listing real estate agent listed and what percentage of them have succeeded in being closed or sold? Compare this percentage to the local area percentage to get some idea of the chances the property will be sold.
7) How many lien holders have liens against the property? With some condos at a minimum there will be first mortgage and the condominium association holding liens. The greater the number of lien holders, in most cases the less likely the property will be closed or sold. I have seen some condos having as many as 7 liens.
In order to say if it would be risky, the above questions need to be answered. Once you have obtained the answers you will be in a much better position to determine for yourself how risky the rental would be.
Glenn Ginsburg and A Delta Realty is providing this answer for informational purposes only and does not constitute any legal, accounting or tax advice. You are advised to consult an appropriate professional for legal, accounting and tax advice.
A question was asked yesterday “How far below peak would you guess homes and condos are in the Naples area?
Statistics for homes sold show the median sold price through June 30, 2010 in the Naples area to be $227500 down 52 percent from calendar year 2005 (the peak year) median sold price of $474450. The current median sold price is approximately the same as it was in 2002. The median sold price in 2010 has increased 17 percent over 2009’s, the median price sold of $195000.
Median Sold Prices for Homes by Year in Naples Florida
The statistics for the median sold price for condos in the Naples area through June 30, 2010 to be $165000 down 54 percent from calendar year 2005 (the peak year) median sold price of $360000. The current median sold price is approximately the same as it was in 2002. The median sold price in 2010 has increased less than 1 percent, which is insignificant.
Median Sold Prices by Year for Condos in Naples Florida
The condominium statistics of the Naples real estate market is showing stability for the median sold in a year over year analysis. The volume of closed sales is level with last year. The number of pending sales is higher than last year. The new listings of condos for sale showed a decline in the volume.
Median Sold Price:
During the month of June 2010, the median sold price of a condo in Naples was $164000. The median price is the sold price represents the middle value of the all sold prices within a stated range. The median sold price can vary from area to area within a local real estate market.
In June 2009, the median sold price was $165000. In the year over year comparison median sold price declined $1000 or less than one percent.
In June 2008 the median sold price was $276987. In comparing June 2008 to June 2009 the price declined $121500 or about 40 percent.
Although the median sold price declined in a year over year analysis of the market, the immediate past 12 month median sold price trend reveals an upward trend.
Closed Sales:
In the month of June 2010 the number of condos sold was 303. In June 2009 a total of 312 condos were sold. The year over year comparison was less than a 3 percent decrease. In June 2008 a total of 202 condos were sold. The increase over 2008 was 101 condos or about a 50 percent increase.
Of the 204 condos sold, approximately 18 percent were approved short sales, 15 percent were foreclosures, and the traditional sales were 67 percent.
Pending Sales:
During June 2010 a total of 338 condos had an offer accepted by the seller. In June 2009, 298 condos had offers accepted. The increase from June 2010 represents an increase of 40 condos or about 13 percent.
In June 2008 a total of 168 condos were pending sale. The increase between June 2010 and June 2008 was 170 condos or about 102 percent.
The total number of condos pending sale in the Naples area as of the end of June 2010 was 817.
Listings:
The new listings for the month of June 2010 were 566 condos in the Naples area. The number of condos listed in June 2009 was 609. The decline of new condo listings coming on the market condos was 7 percent. In June 2008, the new listings were 560, representing an increase of 6 condos or 1 percent.
The statistics of the Naples real estate market segment for single family homes should the median sold price of homes increased 24 percent over June 2009. The volume of homes sold increased slightly less than 1 percent and the number of new listings declined 6 percent in a year over year analysis. The number of months of homes to be sold declined to 9.8 months from June 2009’s 14.7 months.
Median Sold Price:
During the month of June 2010, the median sold price of a home in Naples was $245000. The median price is the sold price represents the middle value of the all sold prices within a stated range. The median sold price can vary from area to area within the local Naples real estate market.
In June 2009, the median sold price was $198000. In the year over year comparison the median sold price increased $47000 or roughly 24 percent.
In June 2008 the median sold price was $345500. In comparing June 2008 to June 2010 the price declined $100500 or about 29 percent.
Closed Sales:
In the month of June 2010 the total homes sold was 421. In June 2009 a total of 419 homes were sold – very similar volume of sales. In June 2008 a total of 283 homes were sold. The increase over 2007 was 138 homes sold or about a 49 percent.
Of the 421 homes sold, 21 percent were approved short sales, 25 percent were foreclosures, and the traditional sales were 54 percent.
The breakdown of the median sold prices was discussed in the median sold price section above.
Pending Sales:
During June 2010 a total of 498 homes had an offer accepted by the seller. In June 2009, 512 homes were pended. The decline from June 2010 represents a decrease of 14 homes – an insignificant change.
In June 2008 a total of 278 homes were pending sale. The increase between June 2010 and June 2008 was 220 homes or 79 percent.
The total number of homes pending sale in the Naples real estate market is 1150, traditional sales account for 26 percent, foreclosures for 14 percent and short sales 60 percent. Traditional and foreclosures takes a shorter amount of time from offer acceptance to closing, while short sales can take about 6 months from the time of offer acceptance before they can close, if they do close – the reason for the high percentage of short sales in a pending sale status.
Listings:
The new listings for the month of June 2010 were 704 homes in the Naples real estate market. The number of homes listed in June 2009 was 750. The decrease in the number of new listings of homes was 46 or about 6 percent. In June 2008, the new listings were 820, representing a reduction of 116 homes or a decline of 14 percent compared with June 2010.
At the end of June a total of 3618 homes were for sale representing 9.8 months of homes to be sold. Traditional listings represented 75 percent, short sale 20 percent and foreclosures 5 per cent of the total listings.
In June 2009, 4104 homes were for sale representing 14.7 months of homes to be sold. The decline in the number of homes for sale is 486 or 12 percent, while the 4.9 month decline in months of home to be sold by 33 percent.
In June 2008, 5354 homes were for sale representing 30.5 months of homes to be sold. The decline in the number of homes for sale is 1736 or 32 percent, while the decline of 20.7 months, represents a decline of 68 percent.
The large decline in the months of homes to be sold is attributed to the increase volume of homes sold during the past months.
The months of homes to be sold is watched to determine the strength of the real estate market for both buyers and sellers. When the number of months is in excess of 6.5 months it is considered a buyers’ market, the higher the number of months the stronger the buyers’ market or the weaker the sellers’ position. When the number of months is less than 5.4 months, it is considered a sellers’ market, the lower the number of months the stronger the sellers’ market or the less favorable to a potential buyer. It is considered a neutral market when the number of months of homes to be sold is between 5.5 and 6.4 months.