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Date of Issue: July 09, 2008

Island home foreclosures could mean buyer bargains

/isl-foreclosure.jpg
Flipped out
This house on Flotilla Drive was part of a recent New York Times story on the practice of "flipping" homes during the real estate boom years of 2005-07 that led, in part, to the mortgage-lending crisis. A segment of the television show Fox Business Network also featured the property. Islander Photo: Rick Catlin

With home foreclosures in Manatee County and throughout Florida are at all-time highs, buyers on Anna Maria Island could easily find some great bargains, according to Island real estate agents.

The Island, as local real estate agents say, is always in demand and a bargain here generally doesn’t last long on the market.

At least one Web site that lists foreclosed properties or those about to enter foreclosure, reports 70 single-family homes and condominiums on the Island in those categories. Countywide there are 3,038 properties, according to the same Web site.

Based on an Island population of about 7,500 people - 2.2 percent of Manatee’s estimated 330,000 residents - 70 foreclosures out of 3,038 is 2.3 percent of the total.

“That’s about right for Anna Maria Island,” said May Aston of ReMax Alliance Group on Manatee Avenue.

Aston, who specializes in foreclosed and distressed properties, cautioned that when using a Web site to find bargains, “There are a lot of figures out there that are incorrect.”

But foreclosures are here and are being filed in record numbers.

Figures just released by the Manatee County Circuit Court indicate 2,660 foreclosures were filed in Manatee County through the first six months of the year, breaking the record number of 2,620 for all of 2007.

“And it’s not likely to end any time soon,” said Aston.

But the Island, as Islanders like to say, is not like the mainland.

 While some foreclosed properties on the mainland might be considered “distressed,” those on Anna Maria Island are quality properties, Aston said.

Island real estate agents see those “quality” foreclosures as a boom market for buyers.

“The Island is always in demand,” said Jason Sato of Sato Real Estate in Anna Maria.

It makes foreclosed properties here an eye-catcher because they are likely to be genuine bargains as the Island real estate market re-establishes itself, said Jessie Brisson of Gulf-Bay Realty in Holmes Beach.

In some cases, the bank wants to get out of the mortgage and will consider an offer for less that what it’s owed, Sato said.

In a pre-foreclosure scenario, the homeowner has received a notice from the bank of impending foreclosure. The owners often will listen to any offer that will gets them off the hook and avoid foreclosure.

Sato and Brisson said they have seen an upswing in foreclosure showings and have been involved in several such property sales.

Interested buyers, however, should avoid relying entirely on a Web site for information on a property.

It might all look good on the Internet, said Brisson, but not all the sites represent licensed real estate agents.

Brisson said buyers who use the Internet to find bargains should know what they’re looking for and be wary of an extremely low price.

 The low price listed on a Web site is the “hook” to get the potential buyer to purchase a Web service. Once signed up, a buyer will get full information on the location of the property and whether or not it’s for sale by a bank, owner or real estate agency.

An Internet search of Web sites for foreclosed properties found more than 10 such sites and each site had a different figure for the number of Manatee County foreclosures. Some of the Web sites provide basic information on each property at no charge, while most require a fee to see the complete listing, including addresses.

In searching Web sites, the uninitiated buyer should know that a “short sale” is usually a sale below the amount owed to the mortgage company and prior to the foreclosure.

And that’s one of the reasons why property values are in decline, Aston said.

“The problem is that a lot of these properties are ‘flip’ homes and just not worth what someone paid,” she said.

In a ‘flip’ home, the buyer purchases the property for a minimal amount or even no money down, then obtains an immediate appraisal. When the re-appraisal shows - on paper - that the home is worth considerably more than what the buyer just paid, the buyer will take that appraisal to a lender such as Countrywide, obtain a higher mortgage, pay off the first mortgage and pocket the difference.

Flipping houses works fine until there is no longer a buyer. At that point, the speculator is left with a high mortgage on one or more properties and is unable or unwilling to make the payments.

An example of a “flip” home gone bad is the house on Flotilla Drive in Holmes Beach once owned by Scott Hopp and recently featured in a report in The New York Times and on Fox Business News television.

According to the Fox program, Hopp purchased the house for $750,000 with no down payment, then obtained a refinance mortgage with Countrywide for $1.1 million, using an appraisal with a higher value. Hopp used Countrywide for several other Manatee County “flip” home purchases, including one in Bradenton Beach that he defaulted on.

The Flotilla Drive home will be sold at auction this month with the minimum bid at $369,000, although the bank has the option to reject offers.

Other Island real estate agents alleged GSR Development LLC principals Robert Byrne and Steve Noriega practiced flipping. When the Island real estate market collapsed, the company was left with 22 properties on the Island, all of them mortgaged for more than their market value, according to U.S. Bankruptcy Court records.

With so many foreclosures and pre-foreclosures, Aston said now is a good time for bargains.

“The banks are working hard with a buyer to make a deal because they have so many of these homes. I don’t see an end in sight. The market will come back eventually, but there’s a lot of foreclosure inventory out there” for the entire county, she said.

And there are some excellent bargains on Anna Maria Island, at least according to one Web site.

The site - realtytrac.com - listed a one-bedroom/one-bath condominium on the Island for $79,000.

“And that might have been just what the bank was owed,” said Aston.

Other Island “deals” on the various Web sites included several single-family homes for just over $200,000 and one for $199,000. A number of condominiums were listed in the $100,000 to $199,000 range.

To put the decline in prices in perspective, in 2005, the average price of a single-family home on Anna Maria Island was more than $600,000, while the average condominium sold for $330,000.

“Prices have really dropped,” Brisson said. “But I believe prices have bottomed out. There was a drop in early 2008, but I’m seeing a leveling off. The Island real estate market is already on the comeback trail.”

According to the multiple listing service used by real estate agents, sales for the first half of 2008 are up 16 percent compared with the first six months of 2007.

Granted that prices are down from last year, said Brisson, but the increase in sales shows activity.

The serious buyer or investor is finding some excellent values in foreclosed and pre-foreclosure properties, he said.

And on the Island, those properties are quality homes, said Aston. “You’re not seeing distressed properties as foreclosures, but very nice houses.”

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