Jacksonville Real Estate Market Information Archive

We only believe in telling the truth about what is happening in the Jacksonville Real Estate market.  And we know the Jacksonville real estate market.  We spend hours every day following market activity and accumulating and analyzing Jacksonville real estate statistics and well as showing, selling and negotiating deals.  We have been doing this for years and know what the trends are, where we have been, and the direction we are headed.  A random statistic by itself is somewhat useless.  To know what that statistic means, you must be able to watch the trend and combine the different statistics together to paint a picture.  This is what we do.

Do we get every listing because we always tell the truth?  No.  Have we lost a lot of potential business because we tell the truth about the market, not what the seller or buyer wants to hear?  Yes, we have.  We have found that many sellers really don't want the truth, they just want someone to feed them a version of the story that they are comfortable with.  The same applies to buyers.  And there will always be someone there willing to do this....just not us. 

Whether you are a buyer or seller you can always depend on us to tell the truth about the Jacksonville real estate market and you can count on us to know.

Every day we hear those that say "things have really picked up" and we think that the ones saying this probably really believe it.  But the truth is that while there do seem to be more buyers looking, that seems to be all they are doing.  January 2009 sales are lower than we have ever seen. BUT WE DO NOT THINK THIS IS A BAD MARKET.  Yes, we did just say that, and that is the truth.  You see, it's all relative. 

If you are a seller wanting to get out of your home without selling short, it is a bad real estate market.  If you are a buyer it's a very, very good real estate market!  Now is the best time we have ever seen to buy a home.  It is a phenomenal buyer's market for you and the last thing you should do is let all of the negative news scare you away from the Jacksonville real estate market.

From 2004 through 2006 we saw a buyer frenzy taking place in the Jacksonville real estate market.  This was a market that was truly incredible for sellers.  They could turn down offers because they knew that the next one would be better.  At the same time, it was not a good market for buyers.  Buyers were paying full price, and many times over full price, to secure a home.  Looking back it was a terrible real estate market for buyers.  But when the media and the industry talks about this time, it was a "great" real estate market.  But this is a generalization that can not be applied to all aspects of the market, particularly to the buyers. But why do today's buyers believe that real estate market was "good" and today's is "bad?"

Times have changed and it has become just as much of a buyer's market as it was a seller's market back then.  So it is amazing to see how many buyers are still sitting on the sidelines not taking advantage of it when a couple of years ago you couldn't have talked them out of it.

We think that buyers are waiting for the "bottom."  The bottom seems to have more star power at this moment than Brad and Angelina.    The bottom, however, is stealthy, sneaky and will come in disguise.  You will NOT know the bottom when you see it because it will look like every other real estate day.  Here's an important tidbit for you...we don't think you'll know that the bottom has already breezed in and out without so much as a wave in your direction until six to twelve months after it's cleared out of the area.  Only history proves a bottom and it takes several months of a trend to know that the bottom was hit.  After that, we really think that it will take months to get the message out because it will not be a message of doom and gloom. If you are waiting on the bottom you will most likely miss it. 

I laugh every time I see this.  Why should a seller, who is headed down the road to foreclosure be bound to a contract that a buyer is not bound to.  We've seen this appear in several offers that we have received and this clause has to be dealt with at the time of the offer.  If this is not resolved in the beginning, you just may get your lender approval only to find out that the buyers have already closed on a different home.  Don't think it can't happen to you.  We've seen it happen in Jacksonville short sales. 

If a seller is in preforeclosure, this type of clause can destroy your chances of a successful Jacksonville short sale.  While you are sitting there patiently waiting for lender approval on your short sale, your buyer may be out buying another home. 

Under our current Jacksonville MLS rules, the listing must reflect that there is a contract on the home once you have an accepted contract.  This, unfortunately, will turn away most prospective buyers. 

So are you willing to take your home off of the market for a buyer who is not willing to take themselves off the market for your home?  

If the buyer comes up and later lets you know they have purchased another home, you have lost all of that time you can never get back and, more importantly, you may have missed out on your SERIOUS buyer.  Do you want to lose a serious buyer for a buyer who won't even commit completely to purchasing your home? 

Make sure you work with a Jacksonville short sale specialist who knows what to look out for and can help look out for you.  While no short sale is foolproof there are ways to greatly increase your odds for success.  A specialist in Jacksonville short sales can do just that.  Let us know if we can help you!

Pre-approved Jacksonville short sales.  This topic is creating a lot of buzz these days.  In large part by people who do not truly understand short sales.  You now have HUD and Fannie Mae sticking their toes into this arena.  We get a lot of calls every week from buyer agents on our short sale properties asking us if the short sale has been approved.  Most of the time this is from agents who have buyers planning to come in significantly under fair market value on our Jacksonville short sale listings.

As Jacksonville listing agents, and Jacksonville short sale specialists, trying to help our sellers avoid foreclosure, or as buyer agents trying to get our buyers a great deal, we do not want any predetermined price that the bank will accept.  This is setting the deal up for failure unless the buyer is willing to overpay. 

This is the part where we see a lot of confusion coming from the other side.  Many agents and buyers believe that the amount the seller owes is an important factor.  It's not.  Many believe that they have to get a certain amount off of the list price and submit offers that are too ridiculous for the bank to allow the transaction to proceed.

The way to have a bank ultimately approve a contract between the buyer and seller is to write the offer based on what the fair market value of the property is.  When making a decision whether or not to release the lien the lender will have either a BPO or appraisal in the file that tells them what the fair market value is for the home.  Even if this amount is high, it is what they will use in their assessment.  The amount they must receive at the end of the day, so to speak, is what they are looking at.  Depending on the seller's loan type (VA/FHA/Conventional) the net amount they will need to receive is different.  VA has required the highest net of this fair market value historically.  Unfortunately, HUD has changed the guidelines for FHA, raising the acceptable net amounts substantially.   For an FHA short sale (keep in mind we're talking about the seller's financing, NOT the buyers) the amount of time the home has been on the market now also matters as the ratio changes based on this.  For conventional, there is a rule of thumb, but as we've found, some banks require higher than this rule.

It truly is a numbers game for the bank, detached from all emotion.  That is why the BPO or appraisal (once again depending upon the seller's loan type/lender) coming in at true market value is essential.  In a declining market, what will happen if we are working off of a three month old lender's appraisal?  The lender will have an inflated perception of what the home is worth and will have unrealistic demands regarding net proceeds.  Ultimately the transaction will fail and the seller will be that much closer to foreclosure.  The buyer will be incredibly frustrated and the doomed deal will contribute to the rampant myth that short sales don't work.

Every day I hear someone else being interviewed on CNBC that states, in some form, that the people being foreclosed on are those who overbought or were "irresponsible."  This is a careless generalization.  Most of the people that we encounter in a Jacksonville pre-foreclosure or a Jacksonville short sale situation did not overbuy at all. 

In reality, we are seeing people who have since lost their jobs and can't find work.  We are seeing people who have since had devastating medical problems.  We are seeing people who have since experienced a drastic and unanticipated reduction in income.  We are seeing people who would love to be able to keep their homes.

When these people found out that they had to try to sell their home and reduce their bills they also found out that they couldn't.  The market had already dropped and they owed more than their home was worth.  They did not cause the market drop to the point where they could no longer get out and pay off their mortgage.  But because of the market drop they no longer could sell their home for what they owed. 

This forces those in this position to either give up their home, or explore the option of a short sale.  Either scenario further drives down neighborhood prices. 

The next person to find themselves in the same situation faces an even deeper deficit.  And so the cycle goes.

What an interesting month it has been in the Jacksonville real estate market.  With us closing the door on January at the end of this week, we will be keeping a close eye on the numbers.  Through this morning the month-to-date trend is very interesting and it appears that for the first time, the sales of distressed properties may possibly surpass straight resales in the Jacksonville real estate market.  For the closings month-to-date this has happened.  We'll have to see how the numbers look a week from today to know if that fact will hold.

There are 10,602 homes for sale (non-condo) in the Jacksonville real estate market this morning.  There are 1,610 homes under contract at this moment.  There have been 9,704 homes sold in the past year, and 479 sold in the past 30 days.

The pending to active ratio for the Jacksonville real estate market is 15.19%, still far from our benchmark 50% that is indicative of a balanced market.  This is the highest we've seen the ratio go since September of 2008 and a year ago at the same time this number was only 11.18%  At the same time in 2006 this ratio was at 18.20% and the Jacksonville real estate market inventory was only at 7 months.  At this point in time, as the pending to active ratio suggests we were already well into a buyers market.  At the same time, most in the area had no idea that we were in a buyer's market since the inventory still appeared to be somewhat low and could be attributed to being a seasonal drop.

We have a 13.11 month inventory in the Jacksonville market right now.  Last year at this time we had an 11 month inventory.  Today's level is down from the high of around 14 months we saw a few months ago.  The inventory level at the point the real estate market started to fall was at less than 4 months.

As more sellers who do not have to sell begin to take their homes off of the market, we should see the inventory level continue to go down. Today 64% of the homes on the market are straight resales while only 25% of the homes on the market are distressed properties.  Even though the number of straight resales almost triple the number of distressed homes on the market, only 32% of all homes that are under contract are straight resale while over 51% of all homes under contract are distressed properties.  The pending to active ratio for distressed properties is dramatically better, almost 31%,  while the pending to active ratio of straight resale properties is only 7.66%.  The straight resales that are selling are the ones who are able to price their homes competitively with the distressed properties.  Overpriced homes do not sell in this market and rarely get showings.  Buyers are rejected everything but the best priced homes.

If you are thinking about putting your home on the market, you have to price ahead of the market.  You owe it to yourself to get an upfront honest evaluation of what your home is really worth in today's market.  Do not overprice your home.  You are only going to cost yourself time and more money if prices continue to fall. 

If you are only the fence about buying, hop on off!  There are incredible values out there just waiting to be snapped up.  Just remember, if you want the best deal, look for an agent who really knows the market, is a short sale specialist, and does not shy away from distressed properties.  Call us if you need us!  904.371.9654.

This is one we've seen and heard quite frequently.  We got it again this week on one of our listings.

In a short sale, the SELLER is the seller.  Confused?  The homeowner is the seller.  Not the bank.  There is a misconception out there, that seems to be pretty common.  Buyers don't always understand that the lender is not the seller.  When the lender is the seller it is an REO, a Foreclosure.

In a short sale, the homeowner is trying to prevent foreclosure.  They have had a change in circumstances which makes it impossible for them to continue to keep the home.  Usually they are not up-to-date on their payments, sometimes they are.  When they realize that they can't keep their home and do not just want to sit back and wait for a foreclosure to happen, and can not get a modification or refinance, some homeowners will attempt to sell their home short.

The lender is not the one responsible for negotiating the contract.  The homeowner is the seller.  The homeowner is who the negotiations take place with when there is an offer on the property. 

The lender's function in a short sale is to release the lien.  This is the same as the lender's function in any other straight resale.  The only difference is they have to make the decision about whether they should release the lien or not given the price, market conditions and fair market value of the property.  If the offer is good and meets specific criteria, and nets the bank a high enough dollar amount, they will usually approve the deal.  When they approve the deal, they are agreeing to release the lien.  This is what it is about.  This is simple, and a non-issue, in a straight resale because why would they not release the lien when they are getting all of their money.  The fact that the bank will not be getting all of their money back is the reason that it is more complicated to get the bank to release a lien on a short sale.

When an offer comes in on a short sale, the negotiation is between the buyer and the seller.  If the buyer and seller can both agree on the price and terms both parties sign the contract and are bound to the terms of the agreement.  The transaction then proceeds.  The only difference is that an extra layer is added because you have to get the bank to agree to release the lien.  That is what makes a short sale take longer.

We have seen short sale offers listing the bank as the seller.  This is not correct.  The homeowner is the one who has to agree to sell the property.  The homeowner is the one who is selling the property.  Not the bank.

We have seen short sale offers (got one this week) where the buyer wants to submit the offer, but refuses to deal with the seller.  They want the seller to submit the offer to the bank because "they want to negotiate with the bank" and "they don't want the seller to decide what price the bank will accept"  This is wrong.  The seller is who the sales contract is with.  It does a buyer no good for the seller to submit an offer to the bank that is not binding on the homeowner who is the seller of the home.  A bank wants to see a legitimate CONTRACT (not an offer no one is bound to).  Without a contract, there is no deal to release a lien for.  The seller is not bound in any way to the deal and can sell the property to any buyer who comes along.  Why would a buyer want to submit an offer to someone who is not even the seller and wait for them to respond when the real seller can enter a contract with someone else to sell the property?  We don't have the answer to this.  We think it's because the potential buyers simply don't understand what a short sale is.

Make sure you are educated!  If you would like to buy a short sale, make sure your agent is a specialist and is well versed in the way a short sale works and very comfortable with the process.  We can help you with any short sale in the Jacksonville real estate market.  Let us know if you need help.

If you can no longer make payments and need to sell your home, give us a call.  Representing a seller in a short sale is a very complicated, detailed job.  Make sure you are giving it to someone who knows how to handle this type of transaction successfully.  Winging it is not an option on a short sale.  You can contact us here.

When I was looking over HUD's new guidelines last week for FHA short sales, one part particularly bothered me.  The statement was in the document that in appraising a property in the Pre Foreclosure Sales Program no distress sales can be used as comparables.

Well, that sounds like an incredibly stupid statement if you look at the fact that 22.36% of all homes sold in the past year in the Jacksonville real estate market were distress sales. 

In the past month over 35% of all sales were distress sales-either short sales or foreclosures.  For the end of December this number was 31.69%, November was 33.5% and October was 30.59%.

Currently, 53% of Jacksonville area homes under contract are distressed properties.  These number are calculated without taking out builder homes, which I would argue are distressed in that they have lowered their prices and many builders are scrambling just to maintain some sales.  So if we were to extract that number, the number of distressed homes sold would be even greater.

Back to my story.  So after seeing this in the new HUD mortgagee letter issued  at the end of December, I got worried.  How can you not include any distress sales in an appraisal when it is short sales and foreclosures that are selling quite well.  You are eliminating over one-third of all sales.  In addition to that, a home that is in HUD's Pre-Foreclosure program is, itself, DISTRESSED. 

I picked up the phone and called a FHA approved appraiser and asked this question.  She said that rule was nothing new, however, if there are not enough recent sales, you have to use distressed properties.  She said that you shouldn't go back more than three months for comps when appraising a property in this market.

Everything she said agreed with my thoughts.  I felt much better.  Then the following business day, a chance encounter with another appraiser opened my eyes.

When asked the same questions, this appraiser said that she absolutely will not use distressed properties, short sales and foreclosures, because they are not the market.  Whoa!  How wrong she is!  At the end of 2007, she would have been correct.  At the end of 2007 short sales and foreclosures had barely broken 6% of all sales for the entire Jacksonville metro area.  At the beginning of the second quarter of 2008 this number began to increase dramatically taking us to roughly 22% of sales at the end of 2008.  Now distressed properties are very much the market with the numbers continuing to climb.

On a short sale, just hope you get the first appraiser, not the second.  The second will go back a year and pull the highest comps and present that to the lender as the value of your FHA short sale.  This will not accurately present the true fair market value of the home.  The seller will lose because the deal will fall through and they will eventually end up in foreclosure.  The buyer will lose because they will be cut out of a good home at a good price.  The bank will lose because they will have to dump the home at a much lower price eventually.

I didn't realize that there was such a shocking difference in the knowledge and awareness of appraisers in the current Jacksonville market.  I guarantee that the second appraiser does not understand the Jacksonville real estate market at all.  A crucial part of being a good appraiser, like being a good real estate agent,  is having your finger on the pulse of the market.  I have no way of knowing what percentage of appraisers are like the first and what percentage are like the second.  Like everything we will just have to see how this unfolds.  I definitely see appraisals come in too high all of the time, although most come in at values that are not high enough to blow the deal.  I even recently heard a story about 2006 values being used by the lien holder(s) to value the home in today's market for short sale purposes.  This is absolutely ludicrous and should never happen.

This is just one of the many challenges a great agent has to learn to maneuver to successfully complete short sales.  If you are in this situation, or would like to pick up a short sale home at a great price, make sure your agent is a specialist and has the knowledge to successfully complete a short sale transaction or your chances of being successful go down.