April 4, 2016

Many Sellers Still Think It’s 2013 Or 2014

The Sun Sentinel reports from Florida. “If you’ve been waiting to buy a house, you might have more negotiating power now than you’ve had in a while. As the traditional spring and summer buying season intensifies, some buyers are turning the tables and asking for closing costs and other concessions, while more sellers are suddenly wrestling with price reductions and expired listings. In February, the number of single-family homes and condominiums for sale jumped 12 percent in Palm Beach County compared with a year earlier, according to the Redfin real estate brokerage. Broward and Miami-Dade counties each saw 4 percent increases. Over the same period, more than a quarter of all Broward homes for sale had a price reduction, up slightly from a year ago, the Redfin data show.”

“Frank Corsello figured his four-bedroom West Palm Beach home would sell quickly, but that was eight months and two agents ago. He’s asking $345,000 — $20,000 less than when he first put it on the market. ‘Buyers are coming through. They all say they love it, it’s their No. 1 house — and then you never hear from them again,’ said Corsello, 68. ‘It’s a beautiful home, it really is, but I guess all sellers think their homes are beautiful.’”

“Real estate agents say many sellers still think it’s 2013 or 2014, when double-digit price increases annually fueled a frenzied market. At the time, investors and traditional buyers competed for homes, leading to bidding wars and offers over asking price. Owners were shocked at what their neighbors’ homes had sold for. When they tested the market themselves, they bumped up their own asking prices for good measure. ‘There are a lot of fixer-uppers that are overpriced — by a longshot,’ said Samantha DeBianchi, an agent in Broward and Palm Beach counties. ‘It’s scaring buyers off.’”

The Tampa Bay Times. “In the past two years, 450 buyers have paid cash for Tampa Bay homes costing more than $1 million. The vast majority of those buyers have been open about their ownership. But federal authorities suspect that’s not the case in New York City and Miami-Dade, where high numbers of anonymous, all-cash sales might be fronts for money laundering.”

“In March, the U.S. Treasury Department began requiring title insurers to identify and file information on the owners of limited liability companies — LLCs — that pay more than $1 million cash for property in Miami and more than $3 million in Manhattan. The purpose, one Treasury official said, is to see whether ‘corrupt foreign officials or transnational criminals may be using premium U.S. real estate to secretly invest millions in dirty money.’”

“‘I’m sure there are reasons why famous people or people of considerable net worth want to avoid being known,’ said Peter Chicouris of Equity Realty of Pinellas. ‘You never know why someone wants to stay anonymous, but real estate is also something that somebody has to be responsible for with taxes and insurance. So getting hold of a representative is important — who the heck do you talk to to make a decision?’”

“Chicouris, who specializes in bank-owned foreclosures, says his team averages 25 to 50 closings a month. About 70 percent of those are for cash and more than half of the buyers are investors purchasing through LLCs. Before the deal finalizes, ‘we go on (state corporate records) to see if it’s a valid entity, just to verify if the person buying the property is the person who owns that company,’ Chicouris said. ‘But there (often) are multiple owners of a corporation or LLC, so sometimes that makes it a little convoluted to see who is the actual signing authority.’”

The Miami Herald. “The Miami Herald, in association with the International Consortium of Investigative Journalists, has obtained a massive trove of confidential files from inside a secretive Panamanian law firm called Mossack Fonseca. The firm specializes in creating offshore shell companies for the world’s richest and most powerful people. Mossack Fonseca’s leaked records offer a glimpse into the tightly guarded world of high-end South Florida real estate and the global economic forces reshaping Miami’s skyline.”

“And MF’s activities bolster an argument analysts and law-enforcement officials have long made: Money from people linked to wrongdoing abroad is helping to power the gleaming condo towers rising on South Florida’s waterfront and pushing home prices far beyond what most locals can afford.”

“A Miami Herald analysis of the never-before-seen records found 19 foreign nationals creating offshore companies and buying Miami real estate. Of them, eight have been linked to bribery, corruption, embezzlement, tax evasion or other misdeeds in their home countries. That’s a drop in the ocean of Miami’s luxury market. But Mossack Fonseca is one of many firms that set up offshore companies. And experts say a lack of controls on cash real-estate deals has made Miami a magnet for questionable currency.”

“Jack McCabe, an analyst who studies the booming local housing market, said it’s impossible to know how many homes are purchased with dirty money. ‘But I think many people believe it could be a sizable portion of the new condominium market in Miami,’ McCabe said. ‘Even though developers and real-estate professionals suspect many of these units are bought with illegal funds, they realize their projects may not be successful without that support.’”

“A number of events and blog posts have explored loopholes in the new FinCen rules. One local seminar held in March was headlined ‘How to Avoid the Treasury Trap.’ It promised to teach real-estate professionals ‘how to avoid money-laundering charges and stay on the right side of the law’ while working with clients who want to keep their deals secret for legitimate reasons. ‘You can not only survive, you can thrive,’ an advertisement said. The Miami Association of Realtors hosted the event.”

“Teresa King Kinney, the association’s CEO, said the intention was not to dodge the regulations. ‘It was to make sure our members understand what the rules are, how they can affect a deal and what the alternatives are,’ Kinney explained.”

“Jennifer Shasky Calvery, FinCen’s director, disagreed. She compared the industry’s behavior to a drunk driver turning around before reaching a roadside DUI checkpoint. ‘It’s always amazing that the drivers think the police aren’t watching that,’ Calvery said. ‘I feel like we’re really learning about the culture of the real-estate economy in Miami.’”

The Real Deal. “Growth for Miami’s home prices slowed again during January, a newly released report shows, as the region’s housing market continues cooling. Several factors are putting downward pressure on the local housing market: a strong U.S. dollar and weak foreign economies have shrunken the pool of Latin American buyers. Rising home prices have helped flush lender-owned properties from the market, which in turn slowed the pace of home sales.”

“And a glut of new inventory, especially for condos, has created a discrepancy in asking prices and closing prices.”