Jacksonville Real Estate Market Information

Short sales are not easy but when successful,  they are well worth the time and effort that goes into them.  To successfully complete a short sale your real estate agent has to have what it takes to be diligent and persistent until the end and have a good understanding of short sales.

The biggest factors of Jacksonville short sale success are:

The initial package.  Does the contract price and terms make sense for the bank/investor and is the hardship package complete and convincing.  This is very important.  Price matters.  Banks are not giving houses away.

The bank you are dealing with.  Some banks are next to impossible to deal with.  Others are relatively stable and predictable.  Some have no interest in loss mitigation, some are very interested and concerned about minimizing their losses.

The loan type you are dealing with. Is your loan conventional?  Is it FHA?  Is it VA?  Do you know if it's Fannie or Freddie?  Do you have PMI?  It is very important to know the answers to these questions from the beginning.  Your short sale process will be much different depending on what you are looking at as far as loan type and whether PMI is involved.  FHA is currently the hardest.  HUD changed the FHA guidelines at the end of December and in practice this has made FHA short sales much harder.  Up until the end of December VA seemed to be the hardest.  FHA and VA both have preset rules and ratios that are acceptable.  The short sale arena is constantly changing. 

Your loss negotiator.  You can't live with them, you can't live without them.  You can't....well...you know the old saying...  The good loss mitigation negotiators are really, really good.  The bad loss mitigation negotiators are really, really bad.  Which will you get?  You won't know until your Jacksonville short sale is in process.  How do you know which type you got?  The good ones will have great communication skills and will communicate regularly with your agent.  The bad ones?  These bad negotiators will block all access to themselves and make it almost impossible to communicate.  Some are just downright jerks.  When you get these negotiators you have to resort to calling the customer service number every day and faxing in all messages you want to get directly to the negotiator.  And you usually do not get an e-mail, phone or fax response.  You have to call into customer service to see if any action was taken as a result of your fax.  Wells Fargo, for example, has "talking heads" trained not to give you any contact information at all for your negotiator.  They will give you their name, but they are not allowed to give you any more information.  You can request a call from the negotiator, but the negotiator does not have to respond and the talking head is not allowed to send another request to the negotiator for a call until the computer shows it's been 72 hours since such a request has been made.  Then the talking head can send another request, but the negotiator does not have to listen.  And so the cycle goes.

There are so many important factors that go into a Jacksonville short sale that they are totally unpredictable.  When done right success is a high probability.  If done incorrectly, your time is just being wasted.  Make sure you have the right Jacksonville short sale specialist on your side for your Jacksonville short sale transaction.  Make sure your agent is knowledgeable in this type of transaction and refuses to give up.  This simple factor will greatly increase your chances of success and make it much more likely you can sell your home short and avoid foreclosure.

Jacksonville short sales are not simple. A lot goes into a Jacksonville short sale, sometimes logic, as you or I would see it, is not part of the equation.   First I'll talk about the logical argument.  Banks should realize that short sales are in their best interest.  Banks should respond to short sale offers fast and sensibly.  Banks should be thankful that Realtors and buyers and sellers are out there working every day to help mitigate their losses.  Banks should have a good system to logically evaluate offers and if Option A will provide less of a loss to the bank then it should be selected over Option B as good business practices would dictate.  These "shoulds" occur in a perfect world...not necessarily in the real one.

We encountered another buyer today that couldn't understand why the seller would turn down his Jacksonville short sale offer for what is probably around 50% of fair market value.

Here  are the reasons that the seller turned down the offer:

• The offer was ridiculously low.  A short sale contract is between the current homeowner and the buyer.  The seller chose to reject the offer because it wasn't even in the same ballpark.  It is the seller's decision whether to accept an offer or not.

• The seller will be potentially facing a deficiency.  This particular bank does not waive their right to seek a deficiency judgment they do "lien release only."  Every dollar of price reduction the seller allows puts them in a position of owing more money down the road should the bank pursue a deficiency. 

• The bank can not just approve a Jacksonville short sale contract when the fair market value of the property is much higher than the contract price.  They have investors to answer to.  When a short sale package is received by the bank they order either an appraisal or BPO to determine the fair market value of the property.  Appraisals usually come in higher than BPOs.  If the property is a VA or FHA there are preset minimum net proceeds to fair market value ratios that must be met.  If it's conventional there are different ratios that have to be followed that are not so clear cut.  The banks are not just going to accept some low number that is well below comparable properties.

• This buyer inaccurately assumed that one comp was sufficient for trying to support his offer.  One comp just doesn't do it.  No less than three comps are used.  If it is a distress sale, or is deemed to have potentially not been an arms length transaction it may be thrown out totally. 

• This buyer also inaccurately assumed that the bank had the right to make the decision about whether to accept the offer or not instead of the seller.  The buyer proclaimed to be providing a significant service to the financial industry by making his significantly low offer.

• The Jacksonville short sale seller has a lot to lose by accepting an offer that does not have a reasonable chance of approval by the bank.  An unrealistic contract can lose the seller valuable time that ultimately leads to foreclosure since in our area MLS the home has to be placed in a contingent status notifying everyone that there is already a contract on the home.

We will be the first to tell you that short sales are unpredictable.  Each one is different from the last, even with the same lender.  The banks are just not good at them yet.  Even the banks that had gotten pretty good at them have been overwhelmed lately.  That being said, a complete financial package, a valid hardship, and an offer that is within the realm of a reasonable discount from fair market value has a good chance of being approved by the bank.

Consult a Jacksonville short sale specialist if you think you owe more than your home is worth.  You need more than a general real estate agent.  You need someone who is educated and understands how short sales work and can help you through the process.

Looking for options for my buyers who are buying at or around $100,000 or less in Northwest St Johns County I noticed that the inventory has been going down fast.

• Northwest St Johns County homes on the market (all ages, all bedrooms/baths)  at $100,000 or below- 11

• Northwest St Johns County homes under contract priced at $100,000 or below- 13

• Northwest St Johns County homes sold in the past month priced $100,000 or below- 12

What does this mean?  We are looking at less than a 1 month inventory for homes in Northwest St. Johns County that are priced at $100,000 or below.  If you are a first time home buyer interested in this price range, you'd better hurry.  We have no way of knowing if this under-$100,000 supply will be replenished or if prices will start to climb above that mark.

There may be bond money for you to help you with your purchase, let us know if you are interested in trying to grab one of these homes.

Here is a great option for you!  http://www.lovelyjacksonvillehomes.com/property/742-MIDDLE-BRANCH-WAY-brJulington-Creek-Plantation-brSt-Johns-Florida  This is a listing we have in Julington Creek Plantation.  This is an already-approved FHA short sale.  Call us to grab this one today before it's too late!

In the name of progress and improving the system, HUD issued new short sale guidelines on December 24, 2008 outlining a brand new set of rules regarding how short sales are to work when the seller has an FHA loan.  These new rules apply to Jacksonville short sales and short sales around the country.

Here are a couple of quotes from HUD regarding why they are making the changes:

"High foreclosure rates continue to have devastating effects on families and neighborhoods. The Federal Housing Administration (FHA) remains committed to taking actions to help families avoid foreclosure. "

"FHA has consolidated in this ML the requirements of the PFS Program that have been issued over the years, and has updated and clarified those requirements where needed, to better address the problems faced by mortgagors today and provide greater flexibility in considering a mortgagor’s candidacy for participation in this program. "

We think that the new requirements are a step backwards.  What they had already wasn't bad.  The net to the lender, after all closing costs were paid, had to be 82% of the fair market value of your Jacksonville short sale. 

Out of the blue they changed the reasonable ratio of 82% to a sliding ratio of 88% (first 30 days of marketing), to 86% (for the next 30 days of marketing), down to a minimum acceptable ratio of 84% if the home has been on the market over 60 days.  They raised the amounts that the lender has to net on the deal.  In a buyer's market heavily saturated with distressed sales, we are not sure why they thought that this will provide "greater flexibility."

Sure, they got rid of the pesky ratio that required the market value be a certain percentage of the total loan amount which was definitely a good thing.  Raising the ratio was definitely a giant step backwards that will make it harder to purchase an FHA home in a short sale and ultimately force more families into foreclosure.

HUD requires an appraisal, rather than a BPO, to determine fair market value.  The guidelines instruct the appraiser to determine fair market value using comps that are not distressed properties.  Wouldn't a true "comparable" be a distressed property by definition?  This is while the national average shows around half of all homes being sold now are distressed properties.  Our Jacksonville real estate market shows a similar ratio.  So now you have to obtain an offer of 88% (or 86% or 84%), of an inflated fair market value determination, to have a successful FHA short sale.

Here is another interesting tidbit.   The letter outlining the new requirements state, "Regardless of the property's sale price, a mortgagee may not approve a PFS contract if the net sales proceeds fall below the minimum allowable thresholds stated herein.  HUD has established guidelines for varying  minimum net sales proceeds based on the length of time a property has been competitively marketed for sale."  (Emphasis ours) While the letter says it's based on the length of time a property has been competitively marketed for sale, we are being told by a major lender that the "marketing period" according to HUD doesn't start when the home is actually put on the market.  Instead the marketing period for the purpose of determining the applicable ratio doesn't start until the lender has issued an approval to participate in the program.  This approval to participate is not issued until after a file review is completed and an appraisal determines the "fair market value" for the property which, as we've seen, can take months. 

The lender does not have a timeframe, that we can find, that they have to respond to the application to participate.  It just took over two months to get an approval to participate with complete package submission on Day One for one of our sellers.  Nothing was missing from the package and they did not have to request additional documentation.  They just sat on the file for two months, even with regular calls and communication.  This timeline will vary from bank to bank, and even negotiator to negotiator within the bank.  In the end you will have a preapproved price that you must obtain to successfully sell your Jacksonville short sale, even if the market demands a lower price.

So is the seller supposed to delay putting their home on the market waiting to be told the price they are allowed to sell the home for?  This wait is for an unpredictable amount of time.  In a declining market they will be waiting while market values crash around them and will likely be given an inflated, and unattainable,  price in the end.  And what if an approval to participate is not issued until a long period of time after the appraisal (which is likely to be inflated to start with)  is completed?  Does a seller go ahead and put their home on the market before the approval is issued knowing they have to get 88% of some value they aren't aware of yet?  Why should a seller waste valuable marketing time when values are headed lower?  This defies reason.

This is just one example of why you need an experienced short sale specialist when selling your home.  All short sales will not be successful.  At the same time, if you are working with a Jacksonville short sale specialist who understands the system and the challenges, and how to work around them, you will greatly increase your odds.  If you have a Jacksonville short sale, or are thinking about purchasing one, make sure you have knowledge and experience on your side. 

The overall Jacksonville Florida real estate market has an inventory level of 12.87 months based on the past year.  Based on the past 30 days of sales this level is currently at 18.73, down from 22 months just one month ago.  This is an indicator that Jacksonville real estate market activity is picking up.  We have seen the pending to active ratio go from around 14.5% a month ago to today's 18.73%, a healthy jump in current activity.  This demonstrates that buyer are putting down contracts at a higher rate than they were.  Although it's still a strong buyers market, it's moving closer to healthy territory than we have seen it in a long time.

The most balanced sub-market we see today is in the Southside Jacksonville area.  Southside has an inventory level of just over 10 months based on the past year and 14.81 months based on the past 30 days sales.  This is down from Southside Jacksonville's real estate market inventory that, just a month ago, was at 10.74 based on the past year and 21.76 months based on the past 30 days.  This change in the 30 day inventory level represents a significant increase in home buying for this area.  The active to pending ratios we see for Southside Jacksonville is up roughly 2% from a month ago for the overall Southside Jacksonville Real Estate Market.  For distressed properties (Short Sales and Foreclosures) in the Southside Jacksonville Real Estate Market the pending to active ratio is up 5% from just a month ago.  These numbers indicate more buyers are putting down contracts.

The sub-markets where buyers have the biggest advantage today is out at the beaches.  Jacksonville Beach, Neptune Beach, Atlantic Beach and Ponte Vedra Beach are all demonstrating a real estate market that is highly weighted towards the buyers. 

The Ponte Vedra Beach real estate market has seen the pending to active ratio go up in the past month from a low of 5.76% to 9.38%.  An interesting note is that the pending to active ratio for Ponte Vedra Beach distressed properties has increased from 20.93% a month ago to a balanced 56.41% pending to active ratio.  This indicates that although Ponte Vedra Beach has a very weak real estate market currently overall, in the area of Ponte Vedra Beach short sales and Ponte Vedra Beach foreclosures, it is now a balanced market, with no advantage to buyers!  Buyers are apparently hungry for bargains in Ponte Vedra Beach.  Remember, this is indicative of buyers getting off the fence and entering into contracts with sellers...we can not predict how many of these will go to closing.  Inventory levels in Ponte Vedra Beach have remained steady for the past month based on the past year's sales.  The inventory levels based on the past 30 days sales have gone down from 47 months to today's inventory level of 35.53 months.  This indicates a pickup in the pace of Ponte Vedra Beach real estate sales.

For the Jacksonville Beach, Neptune Beach and Atlantic Beach sub-market, numbers have remained very steady in comparison today compared to a month ago.  The pending to active ratio has gone up a little over 1% in the past month.  The beaches inventory level based on sales for the past 12 months has remained almost completely unchanged.  The inventory level based on sales for the past 30 days has dropped only 2 months of inventory since last month this time.  This is an indicator that the Jacksonville Beach, Neptune Beach and Atlantic Beach real estate markets do not seem to be picking up as fast as some of our other sub-markets and the Jacksonville real estate market overall.

We will continue to follow this for you and let you know the conditions of the Jacksonville real estate market as they develop.  For expert, reliable help from a team of real estate professionals who really understand the Jacksonville real estate market call us!