Hi folks. I originally posted this article in October of 2006. The comments on the original post (VERY HEATED DEBATE ALERT)are quite interesting. At the time, people just couldn’t believe that appraisers were making downward adjustments in their appraisals for a declining market. Do you believe it now?
Let the games begin!
Ok, so I just received a call today. I’ve kind of been expecting it but was hoping it wouldn’t come for a while. The call I received was from an Appraiser. Now, since I sell a lot of properties in my market, I get one of these about every week, asking me about a recent sale, so they can use it in their appraisal. I always try to answer any of their questions and try to be as helpful as I can. Why? Because I want to be the “go to guy” in my market. Also, Appraisers buy and sell houses. I usually get a couple of listings a year from Appraisers wanting to sell in my market area, Poinciana Fl. So having them call me is a good thing.
Today was different. Today, he was asking me about one of my pending listings. He had plenty of sold comparables but the few he had, that were pending, were listed for about 10% below recent comparable sales. I spoke to him for a few minutes and he explained to me that he was making downward adjustments based on current market conditions. Did you catch that? Downward adjustments. As in, discounting the value of the sold comparables. Folks, this is not a good thing. This means lenders are checking and double checking house values and are wanting to see “true” market conditions as opposed to just recent sales. It also means values in Poinciana Fl are coming down. I already knew this but was hoping I was wrong.
Poinciana is one of those Florida markets where you can still find affordable housing. Most homes are in the $185,000 to $250,000 range (These figures are from when this post was written in October 2006. Now houses are mostly $100,000 to $125,000 with homes as low as the 50s). What happened over the last couple of years, was that, all the “investors” from S. Florida and NY were feasting on Poinciana real estate. They were here by the hundreds and purchasing vacant lots and new construction like crazy. Because of this, houses that were selling for $100,000 in 2004 were selling for $225,000 by mid 2005. Lots that could be bought for $10,000 in 2004 skyrocketed to $60,000 to $70,000 by early 2005 (Now you can’t give them away for $10,000).
Fortunes were made in Poinciana during 2005. But, and this is a big BUT, if you didn’t get out of the investor market by December 2005, you are now stuck. As of this morning, there are 1,500 houses on the market in Poinciana. 800 of these are less than 18 months old and most of them are vacant investor owned properties. They are flips that have flopped. Not only that, but builders have pre-sold hundreds of houses that they have just now started building. These houses were sold at 2005 prices.
This, my friends, is a recipe for disaster. Property values are plummeting. Poinciana is in trouble. My Sellers know this. I have told them we must sell and we must sell now. It is going to get worse before it gets better. Our peaceful little town has been raped by over zealous builders and fly by night investors. And frankly, it *&^%* me off! But what do you do? It is what it is and I have to deal with it.
My strategy is to become the short sale and foreclosure expert in my area. I want to be the “go to guy” if you are in a distressed situation. I can’t change the market but I can try to position myself to help as many people as I can to get through this and hopefully still have a shirt on their back.
I expect to be very busy. I expect to make a lot of money. I expect it to be a “bitter sweet” success. Let the games begin!
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