April 1, 2009 Miami-Dade County will begin enforcing its Foreclosure Ordinance. This ordinance that was enacted on December 12, 2008 may be the downfall of the real estate market recovery in Miami-Dade County. More importantly, it puts homeowners who buy these foreclosed properties at risk. To make matters worse, at the April 7, 2009 Commission meeting, they will be having the first reading on another ordinance that will do the same for ALL RESIDENTIAL PROPERTIES transacted in Miami-Dade. 

This ordinance was touted as a consumer protection measure, but it will do the opposite and it will also kill the real estate market recovery we are already experiencing in Miami-Dade. At a meeting held on March 20, 2009 at the Miami Dade County Permit Center (PIC); Realtors, Architects, Engineers and Attorneys were told the following:

• The ordinance applies to all foreclosed properties located and titled in Miami Dade County after December 12, 2008 and sold after April 1, 2009. Non compliance can result in a daily fine of $500 up to a maximum of $30,000.  
• Properties must be inspected by licensed architects or engineers to determine needed repairs including building and zoning code violations. The findings including a good faith estimate must be documented on the Disclosure Findings Report provided by Dade County B&Z. 
• Once reviewed and accepted by the Dade County B&Z before it is filed with the Clerk of the Courts. The report then becomes a public record available through the Internet to anyone around the world.
• After the report is recorded, the seller must obtain a Certificate of Use prior to executing any contract - the Certificate of Use fee is $300 plus 8%.
• Life safety violations and other violations may be required to be corrected prior sale. However B&Z may decide that on a case by case basis. The County can follow up on any and all pending violations after the sales closes.

At a workshop meeting held on March 27, 2009 at the PIC for Architects and Engineers some of the information and fees given previously was changed. Another revelation at this meeting was that while the Foreclosure Ordinance is not enforced before April 1, 2009; sellers may still be held liable for not complying with ordinance since December 13, 2008; even though a system of enforcement was not available until April 1, 2009 - think about that for a while. Architects and Engineers who attended voiced their concerns about the ordinance and its implementation. Some indicated that it may cost as much as $5000 to $15000 to do these reports, because of the amount of information requested, the level of detail and the potential liability they may take upon themselves.

There are many things wrong with this ordinance - I am going to focus on the biggest problems:

• The ordinance puts property owners at risk by publishing the inspection reports on-line as a public record. That will make this information available to zealous inspectors, unscroupulous and unlicensed contractors and even crooks abroad, since public records are available on the Internet. The greatest number of victims of this ordinance will be minorities, poor and the elderly who are often targeted because of their lack of knowledge, resources and fear.
• If the Building & Zoning department takes action on the violations identified in the inspection reports, sales of foreclosed properties are going to come to a dead stop. The Asset Managers processing these properties are located out of State and may be handling the liquidation of properties all over the country. These companies are not equipped to handle construction projects at local level. That is why the price the properties so low so the new owners can do the repairs themselves.
• This ordinance may violate our 4th Amendment Right that offers Protection from unreasonable search and seizure. A building inspector like any other government official can't come into our homes without cause. This ordinance usurps that right by requiring that architects and engineers inspect the property and then file that report with the Clerk of the Courts. That means that the violations are published in the public records of Miami Dade County and accessible to anyone with access to a computer and the Internet. Therefore a code enforcement or neighborhood compliance official can mail you a Notice of Violation without stepping on your property, by simply viewing the inspection report through the Clerk of the Courts web site. By the same token that information is also available to every scammer, crooked and unlicensed contractor and everyother person on the web.

If you live in Miami-Dade County contact Mayor Alvarez and your County Commissioner. If you don't know who is the County Commissioner for your District, go on www.miamidade.gov and contact every commissioner. Particularly contact Commissioner Natasha Seijas who sponsored the Foreclosure Ordinance and Carlos Gimenez who sponsored the new Certificate of Use Ordinance that goes for first reading at the April 7 meeting of the Miami Dade Commission.

If you are a Realtor, don't wait for your Board to lead or take action. That is why we have the Foreclosure ordinance, because everyone including me was expecting someone else to solve our problem. If you want to save your business take action now. Our government is only as good as the voters who get involved.

Back in May I wrote a blog asking the question, did Miami's real estate market hit bottom? A month later the experts are beginning to say that South Florida's real estate market may be bottoming out. However bottoming out has many meanings for many people. To us in the real estate business the market shifts are related to sales.

The market peaked on April 2005... most experts now agree on that. What did that mean at the time? What that meant is that was the point that inventory started climbing and sales started declining. Prices started declining months later.

So now many of us are already indicating that the market has bottomed out. Does that mean that prices have stopped dropping. No, prices may continue to drop probably another 3 to 5% for the next 3 to 9 months. That prediction is conditioned upon the absence of other external forces affecting the market. For example if a hurricane traverses Florida - that could impact the real estate market negatively or positively as the case may be.

So why many experts are beginning to think that the real estate market has bottomed out. If you look at the graph below you will see that while volume is leveling off, pended sales reached its lowest point in December 2007 with 767 contracted properties. About 75% of those properties became closed sales in January making that the lowest closed sales with 716 closed sales. Take a look at the pended sales for the following months and you see 1002, 1291, 1527 and 1567 by the end of May. The increase in pended sales resulted in increase in closed sales and by the end of May we had over 1000 closed sales or a 40% increase in sales.

What has changed in this period has been seller's expectations. If you look below you see that in the past 15 months sellers have been reducing their asking price to the point that they are almost at the same level as the sold prices. Smart seller's have learned that the good times are over. So seller's with realistic expectations are meeting buyers who have been sitting on the sidelines for the past two years and we are once again closing sales.

The next question is who is buying? In South Florida, the first buyers were the foreigners. For months, they had been looking at our properties with their valuable currencies and wondering when is the right time to buy? Then they had a little scare a few weeks back when the Euro took a small dip and that seems to have convinced them that now is a good time.

The Europeans started buying some of our upper level properties primarily waterfront and other unique properties. The next group to join the were investors and bargain hunters who started buying foreclosed properties. Now we have the middle group who are finding out that while there are many properties in the market, when they set the criteria for the property they like in the location they want at the price they want to pay - there are only 5 or 6 properties that meet their criteria. Next comes their reality check when their first choice property is bought out from under them.

The South Florida real estate market is resilient and as long as people want to keep coming to the Sunshine State, real estate will continue to go up in value. There are great deals for those who come into the market before South Florida real estate heats up again. If you have good credit and a reasonable downpayment, I suggest you get active now.

The real estate market in Greater Miami, may have already bottomed out in December '07. As we look at single family properties, we see that inventories continued to climb slowly but pended sales appear to have hit bottom in December. Consequently closed transactions reached their lowest point in January '08. Since that time pended sales have been climbing and so have the sold or closed sales.

Actual closed sales transaction take about 60 days to be fully recorded and communicated to the local Boards. So based on previous months we see that about 75% of pended sales may close in the following months. That means that total closed sales in April may be about 435 and in May we can expect about 550. That shows an increasing trend that started in January '08 and is continuing through May.

Sales seem to be fueled on one hand by an increase of foreign buyers on the higher priced properties and and on the other by bargain hunters absorbing some of the foreclosed properties. If the trend continues through the summer months, we could see ourselves in a more stable market for the single family properties this fall or early '09. We could even see single family properties appreciating again in 2009, but in the traditional 4-6% rate.

The Condo market shown below, is exhibiting similar trends, but I would be more careful with this one. We still have a lot of new inventory coming into the market. Some of the new buildings are having problems keeping up with maintenance expense because there are not enough owners to share the costs. Renters are being evicted from foreclosed units and that is fueling some fear on renters who are renting some of the units bought in pre-construction but not flipped in time to miss the downturn.

Previously I thought that newer buildings would be in higher demand than the older buildings because people usually want newer facilities with lower maintenance costs. However with the reports about increasing maintenance fees in newer buildings that are not completely sold out, is causing some buyers to look at more established and stable older buildings.

So the condo market may go through a few more changes before this is all over. But for now it looks like inventories are leveling off and pended sales and closed transactions are on the rise. All signs of a market that may have reached bottom.

However, the economy is so unstable that anything could spook buyers and send us back to the bottom. But if we have a quiet hurricane season; solid election results that give voters a sense of confidence and continuing low interest rates -- Miami may be saying good bye to the real estate slump that started on April 2005. Let's keep our fingers crossed.

As we celebrate Earth Day today, I am taking inventory of the things our family has done in the process of reducing our impact upon this earth. Let me say that I've made it my passion to reduce our family's energy consumption because I have a son in the military and I prefer to have him home protecting our land than defending oil fields somewhere else. So my goal is to stop using oil or energy produced from oil within the next five years. This is a gradual process and every step I take in that direction teaches me something new.

But I've found there are some added benefits from going green. Last year we changed one car to a Camry Hybrid. I waited until the larger hybrids came out because I through they would serve my needs better. This car is becoming a great marketing tool for my real estate business. Besides saving money by increasing my mileage by 50% from my previous car, it is also resulting in great conversations with my customers when I drive them to see properties.

The first question - is this car running? From that point on the questions start and we usually have a great time. It also allows me to promote green values for the home they are planning to buy. Even those stiff customers who some times have a problem communicating start asking question and next thing we're buddies. So my hybrid has become one of my marketing tools and that was an unexpected benefit.

These days is difficult to look in any direction without seeing green. However all this green may be insulating people to the cause and taking us away from the original purpose of this movement. There are many reasons why people are going green and a great many of them seem to be to get some more greenbacks.

There's more spin about regular products being green than actual green products. Part of the problem is that there is no consistent system for evaluating Green products. In yesterday's newspaper there was a story about a business that sold scooters that became green by changing the name to Verde (Spanish for green). They still sell the same scooters, but they now wear green shirts and sell their new and improved green fuel saving scooter - actually the same scooter they sold before the name change.

But since the design and construction industry has been in this path much longer than other industries, there is a method for evaluating green buildings. Years ago architects, planners and engineers formed a single purpose organization called the US Green Building Council(USGBC). Over the years, this organization came up with a system for evaluating buildings called Leadership in Energy and Environmental Design(LEED). This system was first developed for large commercial and institutional buildings, but more recently also focused on residential and even remodeling.

The yardstick for measuring if a building meets minimum Green standards is LEED Certification. A building that is LEED Certified must meet certain minimum criteria and prove it by inspection by a certified LEED Acredited Professional. Meeting the minimum requirements will gain the building LEED Certification. LEED Certification is the minimum level, from that point there are silver, gold, platinum, etc.

This is great, but architects and builders are finding that the system can become a bit cumbersome, because it requires additional testing and record keeping. That means adding staff who are LEED Certified and adding people who will keep track of everything that is done to meet LEED Certification. It also means added cost in managing construction and in actual construction cost.

Contractually it is also developing certain liabilities for design professionals and builders who may commit to meet certain levels of certification that is not known until the building is completed and tested. Lets say a developer markets a building before it is built as a LEED Platinum Certified building and after completed the building only receives a Silver Certification. Needless to say, that may impact the value of the building and may result in litigation against the developers, architects, engineers and contractors. That additional liability needs to be insured and that adds to the cost of the building.

While the original mission of going green was a good concept and the creation of the USGBC and LEED certification a good way to measure the success of a building to meet certain criteria. The process is now becoming more important than its mission.

This is getting more complicated by government agencies and politicians with little or no knowledge about these processes creating laws that buildings must meet certain ratings without considering the financial impact of those laws or providing the funding to meet those requirements. Green is becoming like motherhood and apple pie and no politician is going to turn down a Green Law - but they are not going to provide the funding either.

The objective of the green movement when it comes to buildings is simple. According to the USGBC an LEED building does the following:

• Lower operating costs and increased asset value.
• Reduce waste sent to landfills.
• Conserve energy and water.
• Healthier and safer for occupants.
• Reduce harmful greenhouse gas emissions.
• Qualify for tax rebates, zoning allowances and other incentives in hundreds of cities.
• Demonstrate an owner's commitment to environmental stewardship and social responsibility.

Unfortunately as people read these goals many are seeing two major goals:

• Increased asset value
• Qualify for tax rebates, zoning allowances and other incentives.

The Green Business Model is becoming more important than the green movement. The Green industry keeps growing and just about anything can now be purchased or sold. You can even wash away your pollution sins by purchasing Carbon Credit Certificates or Renewable Energy Certificates. You can continue to pollute and waste energy to your heart's content and then purchase these certificates from companies that  saved their extra credits and eventually become the Greenest Company in your State while still being an energy hog and polluter,

I could go on, but I think this may be a good place to stop and ask ourselves is green really Green? Am I promoting green just to be green or am I living green. Am I teaching others to appreciate those properties that are really green or just calling anything green? I hope I have raised some questions in your mind before we are all painted green.

I hear many national experts giving their opinion about the real estate market and I find their opinion to be as accurate as someone on the space shuttle trying to pick a red, sweet juicy apple from space. With today's technology he may be able to see the trees - he may even see the apples. But only someone on the ground can go to the tree pick a red apple; smell it; take a bite and say if it is a nice sweet juicy apple.

Real estate is the same, yet we have all these national experts telling people what to do and often people make their decisions based on those opinions. Those of us who deal in real estate on a daily basis have the pulse of the market... but not the whole market -- we know our local market. In South Florida and particularly Miami-Dade County we may be bottoming out in the single family market. We are also seeing more activity by foreign buyers who want both waterfront single family properties and waterfront luxury condos.

Many buyers are waiting for some expert to tell them that the market has bottomed out, to begin buying. However, in our local market we are seeing a slight improvement that will need to be observed for another two months to determine if it is a real trend. Then we will need to watch it for another three months for experts to say with confidence - the market has really bottomed out and we are now on the upswing. If you notice, it will take at least six months for experts in our area to confirm a change in the market. Of course this needs to become a national trend before national experts notice what has really happened. So it may be 8 to 9 months before average Joe who is waiting for the market to bottom out, to find out about it.

So if you want to know how's the market doing, ask your local Realtor. He/she really knows better than the national experts what is happening in their market. He/she can tell you where to find the nice red, juicy, sweet apples of investments in your community. He/she is like the expensive fishing guide who knows how to find all the nice local fishing spots.

In our area we are seeing an increase in overall activity including actual transactions. There are more international buyers from Spain, France, England, Germany, Mexico, Brazil, Argentina, Canada and other nationalities. Different groups have different focus areas. We are also seeing more buyers from other states who are also coming into our area. We recently passed a State law (Amendment 1) that allowed buyers to take their tax savings (portability) from one property to another. Many thought that law would create a wave of down-sizing and up-sizing transactions that never materialized.

At this point we are in the midst of the first wave of foreclosed properties. Banks are quickly disposing of their inventories and some buyers are taking advantage of those properties. Most of these properties require a good amount of work, but many are being offered literally "dirt cheap". They are good deals for those who want to fix them. Every so often you may find one that needs little or no work, but those go very fast.

In conclusion, it really doesn't matter if the market is at the bottom, midpoint or event higher. If you have plans of owning a property, this is the time to buy. If you are a marginal buyer at any level. Let's say that you want a single family home and your affordability limit is $250,000 right now we have plenty of inventory - I even saw a foreclosed 3/2 single family house in Coral Gables offered at $299,000-that's 2002 prices. So if you've been dreaming of owning a single family house in Miami-Dade County this is your opportunity. Let's say that you always wanted to live on the water with access to the ocean and your limit is $1,000,000, your dream could be fulfilled right now. For that price don't expect to get a property with no fixed bridges to the bay, but you can get a nice house mostly in the northern part of the County and there may be one or two in the south side. 

However, those who wait to hear the experts say that we have bottomed out, can be guaranteed to be a day late and many dollars short. If you have been planning to buy and don't expect to sell for five years or more, this is your opportunity to buy. For you the market has hit bottom.

The foreclosure crisis is now affecting renters, too. South Florida is continuing to grow, albeit slower than before, but still at a good pace in relation to the rest of the country. With consumer confidence at an all time low and fears of the real estate market, many of these new South Floridians are parking themselves in rental properties.

Unfortunately what they thought was a safe haven is turning out to be a nightmare as many are being evicted from their rental properties -- not for lack of payment but due to foreclosures. Many tenants who think they are safe from eviction because they are paying their rent are finding themselves in the receiving end as lender's representatives knock on their door and inform them they have two weeks to voluntarily vacate the property or face eviction.

In most cases these tenants lose their rent payments and deposits as their landlords suddenly disappear. So what should you do if you find yourself in such a dilemma. First of all don't use the ostrich approach and bury your head in the sand. Ignoring the problem will not make it go away - it will just make it worse. First of all try to avoid the situation completely if you can by trying two strategies.

If you can afford to put down first month, last month and one or two months deposit, you may want to consider buying. In today's market you can get an FHA Loan with 3% down. There are also some first time buyers finance programs that provide low interest mortgages; assist with down payments and even assist with some of the closing costs (http://www.floridahousing.org/) . In this market you may be safer owning, than renting. Don't buy if you know you will be moving in a year or two - selling, particularly a condo could be difficult in a short term situation. But if you plan to stay 3 to 5 years or longer, it is definitely better to own.

If you must rent, do your homework. If you are working with a Realtor, ask them to find out if there is a mortgage on the property. Also try to find out if there is a lis-pendens filed against the property. A lis-pendens is a notice placed against a property that gives indication of the intent to file a lawsuit against the owner. It is like the first shot fired across the bow, before they sink a ship. Ask the owner if he is current with his mortgage payments -- but expect a lie. Depending on how good of a liar, he/she is that may give you a hint. If he/she gets defensive about the question, look for another property. Ask your Realtor to help you determine if there is any sign that the property is in trouble -- he/she may not know for sure, but ask anyway.

Many renter these days use http://www.craigslist.com/ . This a great place to find rentals and suckers, too. Legitimate landlords use this website to find renters - I use it personally. Some Realtors also use this website to promote their properties. But many crooks also use this website and you have to be extra careful. First sign that you are dealing with a crook is that he will want your money no questions asked and you can move in immediately. If you do that, make sure to say good-bye to your money as it leaves your hand. You will probably not see that money again.

A good landlord is going to give you an application and request a fee to process your application. The fee can be anywhere from $50-$100 for a single person, $150 per couple, up to $100 per person in the household. That is used to check your credit & criminal background, eviction history, etc. Your lease is not approved until your background has been checked. That process may take from a few days to a couple of weeks with some condos.

During that time, you may want to talk to the neighbors to find out if they know anything about the house. Has it been empty for a long time - do they know the owners, etc. Ask the landlord to tell you who's their mortgage company and to let you call his lender to make sure he is up to date with his mortgage - they may say no, but it does not hurt to ask. Be careful, because some crooks are taking properties that are abandoned by their owners and before the bank takes possession, they change the locks, rent them out and disappear with your rent and deposits.

If you are unfortunate enough to rent a property that goes into foreclosure, do not sit idle expecting the problem to go away. First order of business is to make a transition plan. You may need to rent storage and move with a friend, family, etc. If you have the money to move to another property, start your search immediately - the Realtor who delivers the bad news can be a source of other rental properties... sometimes in the same building. In the mean time try to buy time from the lender -- ask questions and negotiate.

The first sign you may get that something is wrong may be a knock on the door from a Realtor or bank representative. Remember, they are just the messenger and their main objective is to get you out of the property withing two weeks with as little problem as possible. Request identification from that person; also request proof that they are authorized by the bank to act on their behalf; request proof that an eviction notice is in process - it is usually a letter to the attorneys authorizing them to act. If in a condo, contact the condo association, they probably know if the property was foreclosed. All these questions will give you time to take care of your business.

Once you have determined that they are legitimate, they will most likely give you an offer to return the keys and vacate the properties in 14 days. The offer is usually $500, but you can negotiate and possibly get as much as $1500 depending on circumstances. You can also negotiate up to a month for the move. However, if you become belligerent or refuse their third and final offer, communications will be terminated and your next notice will be from a Sheriff with a moving crew who will move all your belonging to the sidewalk in the case of a house and to a dumpster area in the case of a condo. If you are not at home at the time they arrive, they will leave a notice on the door and the locks will be changed and your possessions will left outside. So you won't want to ignore the repeated notices or the offers to move willingly.This is an unfortunate situation that is occurring now and one that will increase in the months ahead.

In conclusion, if you can avoid this situation by buying, this is a great time to buy. If you must rent, then do everything in your power to investigate your landlord, just like your landlord will investigate your background. If you find yourself in a situation where your rental property is foreclosed, act quickly and decisively. Yes, it is unfair - but complaining and ignoring it won't make it go away. You may want to seek legal counsel to make your final decision.

This week in our sales meeting some agents complained about having problems with appraisals coming in low, even after they based their asking price on a recent CMA; priced the property agressively and the buyers still reduced the sale price further.  

That was when we were alerted to the fact that appraisers were using 90 days old comps. However in some areas and some types of properties are selling at one or two homes per year. So for those comps that are over 90 days old, appraisers estimate 1% per month decline in value.

Many of us find this trend curious, because when the market was increasing at 2-4% and we would try to get appraisers to adjust for the increase in value, they would tell us that it was against lending rules. They would say that the appraisal had to be based strictly on closed sales.

Has anyone come across this trend in other markets? Are there some appraisers or mortgage brokers who can shed some light on this trend?